Will Hyperliquid issue the stablecoin USDH? Paxos, Frax, Agora, and Ethena are competing.

The decentralized perpetual futures trading exchange Hyperliquid announced that it will launch its own stablecoin USDH, and will select the issuer through on-chain governance voting. This will not only drop the reliance on USDC but also capture reserve interest income. It is reported that Paxos, Frax Finance, Agora, and Ethena Labs have expressed their intention to assist in the issuance.

(Hyperliquid's July trading volume reached a new high, surpassing Robinhood. Is the drop in valuation a buying opportunity?)

The New Game of Stablecoins: The Ambition of Hyperliquid USDH

Perp DEX leader Hyperliquid announced on Friday in its Discord that it is preparing to launch its US dollar stablecoin USDH, which focuses on deep integration with its ecosystem and compliance transparency.

The team calls on interested teams to submit proposals for the issuance of USDH, which will be selected through the on-chain governance voting process. The clear voting schedule is as follows:

9/10 10:00 UTC: Proposal submission deadline

9/11 10:00 UTC: Validator Statement

9/14 10:00 – 11:00 UTC: Voting Time

DefiLlama data shows that Hyperliquid's perpetual futures trading volume reached 378 billion USD this month, with spot trading volume exceeding 22.6 billion USD. Among the existing supply of 5.72 billion stablecoins on the platform, USDC alone accounts for over 95%.

Now, Hyperliquid will reduce its reliance on Circle by launching its own stablecoin, while earning interest from its reserves, and token holders are also expected to receive more profit distribution.

Currently, proposals have been submitted or interest has been expressed by Paxos, Frax Finance, Agora, and Ethena Labs. Below, we will analyze the content of each proposal one by one.

Paxos: Highly Compliant, Popular Financial Pipeline

Paxos has always excelled in compliance, previously obtaining regulatory approval from the New York Department of Financial Services (NYDFS) for the issuance of USDP and BUSD. This time, entering the fray with USDH, they proposed:

Compliance Commitment: Complies with the regulatory standards of the US "GENIUS", the EU "MiCA", Singapore, and Abu Dhabi, and has diversified channels for banking, deposits and withdrawals, and payments globally.

Profit Sharing: 95% of the reserve interest will be used to repurchase HYPE and redistributed to partners, developers, validators, and users in the ecosystem.

Strategic Layout: Recently acquired Molecular Labs, the team that is the developer of Hyperliquid infrastructure LHYPE and WHLP.

For Hyperliquid, Paxos provides the most robust and compliant option. They even stated: "We plan to integrate HYPE into the asset infrastructure of Paxos brokerage. This infrastructure provides cryptocurrency trading services for platforms such as PayPal, Venmo, Nubank, and IB Interactive Brokers."

Frax Finance: 100% feedback ecology, high degree of DeFi integration

The stablecoin frxUSD issuer Frax Finance enters the market with a "full rebate" strategy, stating that they will take no fees at all. Their plan includes:

Asset Backing: USDH will be backed 1:1 by frxUSD, which in turn is backed by tokenized US Treasury Fund reserves, compliant with the US "GENIUS" standards.

Multi-chain advantages: USDH will be able to establish itself in the DeFi world, achieving cross-chain deployment and circulation with the distribution of frxUSD, while still maintaining the native nature of HyperEVM.

Revenue Sharing: The 4% APY on U.S. Treasuries will generate approximately $220 million in revenue, which will be fully returned to Hyperliquid for staking incentives, active trader rewards, or HYPE buybacks.

The advantage of Frax lies in the integration of DeFi and full yield rewards, making it more attractive to the community, but it may also pose systemic risks due to excessive reliance on frxUSD.

Agora: Top partners drive multi-chain deployment and real-world applications

The Agora proposal focuses on "alliance-based infrastructure", with the core idea of avoiding single-point dependency and establishing a more open collaborative network. Its proposal highlights include:

Compliance Advantages: Integrating Bridge technology with global fiat deposit and withdrawal channels to meet regulatory requirements such as the U.S. GENIUS.

Revenue Sharing: Similar to Frax, it promises 100% revenue return to Hyperliquid, which can be used for incentive funds or HYPE buybacks.

Gorgeous lineup: Collaborating with partners such as State Street (, VanEck, LayerZero, Rain, and EtherFi, spanning across financial card payments, cross-chain, and traditional finance.

Although the Agora solution can be said to be the most comprehensive in terms of compliance, multi-chain deployment, and real-world use cases, its own stablecoin AUSD still competes with Hyperliquid USDH.

Ethena Labs becomes a mysterious contestant

Ethena Labs has a vague attitude, not disclosing specific mechanisms, but instead expressing interest through mimicking lines from Eminem's "Stan":

Dear Jeff, I wrote to you, but you still haven't called. I sent you two USDH proposals in the fall, you must not have received them. There must have been some issues with Discord.

On-chain researcher Paul stated: "Even though this may be a great opportunity for Ethena to surpass Circle, I don't think the Hyperliquid community will accept Ethena, as there is a potential competition relationship )USDe, USDtb(, and I believe this relationship will become too complicated."

Circle CEO's Clever Wordplay: Don’t Believe the Hype

For Circle, which may lose about 7% of its supply, the emergence of USDH can be considered a significant blow, and CEO Jeremy Allaire has also stated this:

Don’t Believe the Hype, we will make a big entry into the HYPE ecosystem and intend to become its main participants and contributors.

The text implies the necessity of USDH, while emphasizing the inherent advantages of USDC in cross-chain interoperability and liquidity. It seems to be a provocation to the Hyperliquid community, further intensifying the competitive landscape.

The battle of USDH, who will win?

There are still two days left until the proposal deadline, and we may see more attractive proposals, including the stablecoin machine facility M^0 responsible for the issuance of MetaMask USD )mUSD( and the well-established stablecoin protocol Sky Protocol ), as well as Maker(, all of which may participate in this competition.

As the former Messari researcher Monk stated, regardless of who ultimately wins this stablecoin battle, it indicates a high demand for valuable issuance channels; meanwhile, Hyperliquid has launched a highly effective marketing campaign.

Will Hyperliquid issue the stablecoin USDH? Paxos, Frax, Agora, and Ethena are competing for it. This article first appeared in On-chain News ABMedia.