The battle for USDH begins, everyone is eyeing the stablecoin + Hyperliquid concept

Chainfeeds Guide:

The must-win battleground that institutions are determined to capture, even if it’s not profitable.

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Author:

BlockBeats

Opinion:

BlockBeats: Recently, a fierce battle over the issuance rights of the native stablecoin USDH has officially erupted on the decentralized derivatives trading platform Hyperliquid. On September 5, the official team announced the opening of the USDH Ticker auction. As of September 10, multiple parties including Paxos, Frax, Agora, Native Markets, and Ethena have submitted proposals, competing to become the issuer of USDH. The reason this bidding war has attracted so much attention is due to Hyperliquid’s rapid rise: its monthly perpetual contract trading volume is close to $400 billions, and its single-month fee income in August reached $106 millions, accounting for about 70% of the decentralized perpetual market share. Currently, on-chain USD liquidity mainly relies on USDC, with a stock of about $5.7 billions, accounting for about 7.8% of the total USDC issuance. If converted to a native stablecoin, the annual interest income could reach hundreds of millions of dollars, indicating a huge value potential. The Hyperliquid team once considered issuing USDH themselves, but ultimately decided to "delegate" the issuance rights through a public bidding process, shifting towards community governance and multi-party competition. The official team stated that they will adhere to the "Hyperliquid-first, Hyperliquid-aligned" principle, meaning they will prioritize solutions that maximize community rewards and strengthen the value of the HYPE token. Although the official foundation holds a large amount of HYPE, it has pledged not to use its voting rights, and the final result will be decided by a community vote on September 14. This shift is not only a response to centralization concerns but also marks a more open attempt at Hyperliquid governance. Around the USDH issuance rights, major institutions have all shown their cards. Paxos emphasizes its compliance advantage, promising to use 95% of interest income for HYPE buybacks and then return it to the ecosystem. If all $5.7 billions USDC migrates, it could bring nearly $190 millions in annual buybacks for HYPE, and leverage its network resources with financial institutions such as PayPal, Venmo, and Nubank to expand application scenarios. Frax has proposed a more aggressive "zero commission" plan, promising to return 100% of treasury interest income to the community, with distribution entirely governed by HYPE, emphasizing decentralization and transparency, despite lacking traditional financial credibility and compliance resources. Agora has proposed the idea of a "stablecoin issuance alliance," with Agora responsible for on-chain issuance, Rain providing compliant fiat on/off ramps, and LayerZero ensuring cross-chain interoperability, promising to share all profits with the community and focusing on neutrality and non-conflict with Hyperliquid’s interests. Native Markets leverages the compliance and fiat channels from Stripe’s acquisition of Bridge, but since it involves Stripe’s own stablecoin Tempo, there is a potential conflict of interest; its advantage lies in being closer to Hyperliquid’s local ecosystem. Ethena Labs has also expressed interest in participating, focusing on an LSD + derivatives hedging model, but its proposal was not initially responded to by the official team, sparking heated discussion in the community. Overall, Paxos represents "compliance and resources," Frax embodies "DeFi’s ultimate profit sharing," Agora emphasizes a "neutral alliance," and Native Markets focuses on "local understanding," each with its own emphasis. As the vote approaches, community opinion has gradually formed two major camps: one side favors Paxos, believing its compliance endorsement and vast resource network can bring traditional financial users to Hyperliquid, while HYPE buybacks create token demand support; the other side supports Frax, believing its "100% profit sharing with the community" on-chain solution is the most transparent and reliable, fully aligning with Crypto native values. Agora and Native’s proposals have relatively limited support due to limited resources or potential conflicts of interest. Meanwhile, Circle CEO Jeremy Allaire also stated on X that Circle will enter the Hyperliquid ecosystem and promote the issuance of native USDC to address potential threats. This bidding war is not only an experiment in Hyperliquid’s internal governance but is also seen as a touchstone for the evolution of the stablecoin industry model. In the past, stablecoin profits were mostly monopolized by a few centralized issuers, but this time, institutions are willing to give up almost all interest to the community, marking the beginning of the "Stablecoin 2.0" era: stablecoin issuance is no longer aimed at maximizing self-interest, but serves as a "service" to compete for ecosystem entry, sharing profits in exchange for distribution scenarios and governance leadership. In the future, if USDH is successfully launched and forms a positive cycle, other trading platforms or public chains may follow suit, pushing the stablecoin sector from "oligopoly" to "diverse competition," which will have a profound impact on the development of DeFi and the integration with RWA.