A multi-billion dollar prize sits locked within Hyperliquid, one of the fastest-growing perps exchanges in DeFi. Fueled by its ultra-smooth UX and rapidly expanding user base, the exchange has become a dominant venue for on-chain derivatives, with over $5.6 billion in stablecoins—the vast majority being Circle’s USDC—currently powering its trading engine.

That capital generates a massive revenue stream from its underlying reserves, a stream that currently flows to outside parties. Now, the Hyperliquid community is moving to reclaim it.

On September 14th, the stage is set for Hyperliquid’s defining showdown. Its validators will cast a single, decisive vote: who gets the keys to USDH, the platform’s first native stablecoin. At stake is more than just a token. Control of a financial engine capable of redirecting hundreds of millions back into the ecosystem is the gemstone. The process resembles a billion-dollar RFQ or government bond auction, except here it plays out transparently on-chain. Validators, who stake HYPE to secure the network, are the hiring committee—deciding not only who mints USDH, but how billions in yield are redistributed.

The contenders couldn’t be more different—a band of crypto-native builders promising total alignment, squaring off against the deep pockets and polished machinery of institutional finance.

The Proven Model: A $220 Million Annual Opportunity

To grasp what’s on the line, follow the money. Today, the crown belongs to USDC. Circle, its issuer, quietly rakes in fortunes by parking reserves in U.S. Treasuries and pocketing the yield—$658 million in a single quarter. This is the exact business model Hyperliquid intends to capture.

By replacing third-party coins with its own native USDH, the platform can stop bleeding value outward and turn those streams inward. On current balances alone, the reserves behind USDH could throw off $220 million a year. It marks the turn from renter to landlord—no longer a customer of outside stablecoins, but owner of its own foundation. For Circle, the stakes are enormous: losing Hyperliquid’s balances could erase as much as 10% of its revenue overnight, exposing just how dependent it is on interest income.

The only question before the community is not whether to pursue this prize, but who to trust in building it.

But Circle has no intention of giving up ground easily. Even before the USDH plan surfaced, Circle had already moved to entrench itself on Hyperliquid, announcing native USDC and CCTP V2 at the end of July. The upgrade promises seamless USDC transfers across supported blockchains with greater capital efficiency—no wrapped tokens, no legacy bridges. Circle is also plugging in its institutional on- and off-ramps via Circle Mint. The message is clear: the publicly traded issuer of USDC isn’t surrendering Hyperliquid’s liquidity to a competitor without a fight.

The Contenders: A Clash of Philosophies

Several distinct visions for USDH have emerged, each representing a different strategic path for Hyperliquid.

Native Markets, a Hyperliquid-native team, entered the race quickly after the USDH launch announcement, pitching a GENIUS Act–compliant stablecoin built specifically for the platform. Their plan includes integrated fiat gateways for smoother on/off-ramps and revenue sharing with the Hyperliquid Assistance Fund. The team boasts seasoned names like MC Lader, former president of Uniswap Labs, though some community members have raised questions about the timing and funding of their bid. It frames itself as the most locally aligned option—combining compliance, on-chain expertise, and a commitment to channeling value back into the ecosystem. The advantage is obvious: a credible homegrown project that promises regulatory viability and tight alignment with $HYPE. The drawback, as some community members note, is the question of timing and whether the team has the resources to deliver at scale.

The proposal gaining significant momentum comes from Agora, a stablecoin infrastructure provider, which has assembled a coalition of established partners. Agora is joined by MoonPay, a crypto on-ramp service with larger base of licensed jurisdictions and KYC’d users than Stripe;

Rain, for seamless on-chain spending and card services; and LayerZero, for best-in-class cross-chain interoperability.

Backed by a recent $50 million Paradigm-led raise and emphasizing compliance through proof-of-reserves, Agora is pitching itself as fully aligned with Hyperliquid’s interests. Its reserves would be custodied by State Street and managed by VanEck, with Chaos Labs providing proof-of-reserves. The group also pledges at least $10M of day-one liquidity via partners like Cross River and Customers Bank. Its proposal offers an institutionally backed, proven model with one central pledge: every dollar of net revenue from USDH’s reserves would flow back to the Hyperliquid ecosystem. In practice, that means the stablecoin’s growth would translate directly into returns for HYPE holders. Its strength lies in institutional credibility, capital backing, and distribution power. But the reliance on banks and custodians risks reintroducing the very off-chain choke points USDH was meant to avoid.

Stripe, through its $1.1B acquisition of Bridge, has put forward a bid to make USDH the backbone of a global stablecoin payments network. Bridge’s infrastructure already lets businesses accept and settle stablecoin payments like USDC across more than 100 countries with low fees and near-instant finality, and its integration into Stripe brings regulatory credibility, a developer-first API stack, and seamless card/payment connectivity. The company is also rolling out its own fiat-backed stablecoin, USDB, within the Bridge ecosystem—framed as a way to sidestep external blockchain costs and create a defensible moat. The upside is obvious: Stripe’s scale, brand, and distribution could catapult USDH into mainstream commerce. The risk, however, is strategic capture: a vertically integrated fintech with its own chain (Tempo) and wallet (Privy) could end up controlling a core piece of Hyperliquid’s monetary layer.

The other contenders chart a different course. Paxos, a New York–based regulated trust company, offers the most conservative option: compliance above all. Paxos is pledging to channel 95% of USDH’s reserve interest straight into HYPE buybacks. Paxos also promises to list HYPE across networks it powers—including PayPal, Venmo, and MercadoLibre—an institutional distribution channel none of the other bidders can match. Even as the regulatory climate in the U.S. turns friendlier under the Trump administration, Paxos remains the established choice for those who see durability and regulatory approval as the bedrock of USDH’s long-term legitimacy. Its weakness is complete reliance on fiat custody, with exposure to U.S. banking and regulatory risk—the very fragility that doomed BUSD.

In contrast, Frax Finance offers a DeFi-native approach. Born out of the crypto ecosystem, Frax’s proposal prioritizes on-chain mechanics, deep community governance, and yield-sharing strategies that appeal to crypto purists. Their bid is a bet on a more decentralized, community-centric vision for USDH’s future. Its design would back USDH 1:1 with frxUSD and Treasuries managed by asset giants like BlackRock, with seamless redemption into USDC, USDT, frxUSD, and fiat. Frax also pledges to direct 100% of yield to Hyperliquid users, leaving governance fully in validator hands. The upside is a tested, high-yield, community-driven model aligned with crypto ideals; the vulnerability is its dependence on both frxUSD and off-chain Treasuries, which could import external risks and limit adoption relative to fiat incumbents.

Konelia is a smaller, less-publicized entrant in the USDH race, submitting its bid through the same on-chain auction process as the larger players. Its plan emphasizes compliant issuance, reserve management, and ecosystem alignment tailored to Hyperliquid’s high-performance Layer 1. Unlike top-tier contenders, the proposal is light on public detail and has attracted limited community attention. While officially recognized as a valid bidder, Konelia is viewed more as a peripheral participant than a frontrunner in the contest. Its strengths are official eligibility and an L1-tailored proposal, but its lack of detail, brand recognition, and community support leave it a long-shot compared to better-capitalized rivals.

Finally, xDFi, a team of DeFi veterans from SushiSwap and LayerZero, proposes launching USDH as a fully crypto-collateralized, omnichain stablecoin spanning 23 EVM chains from day one. Backed by assets like ETH, BTC, USDC, and AVAX, balances would sync natively across chains via the xD infrastructure, avoiding bridges and fragmentation. The design channels 69% of yield to $HYPE governance, 30% to validators, and 1% to protocol maintenance, making USDH community-owned and free from banks or custodians. Its appeal is a censorship-resistant, crypto-pure design that deepens Hyperliquid’s role as a liquidity hub; its risk is that stability depends on volatile crypto collateral, with no regulatory cover for mainstream adoption.

Curve has advanced yet another path, positioning itself as a partner rather than competitor. Building on its crvUSD LLAMMA mechanism, Curve suggests a two-stablecoin system: a regulated USDH (via Paxos or Agora) plus a decentralized dUSDH backed by HYPE and HLPs but operated on Curve’s CDP infrastructure and governed by Hyperliquid. This setup could unlock looping, leverage, and yield strategies while creating a powerful flywheel for HYPE and HLP value. Curve points to crvUSD’s resilience and stable peg in volatile markets, and offers flexible licensing terms, noting its CDP model has already generated $2.5–10M annually at $100M scale. The strength is a balanced “best of both worlds” approach—regulatory cover plus a DeFi-native option. The weakness is the risk of liquidity and brand fragmentation across two tickers, as well as the reflexivity of using Hyperliquid’s own assets as collateral.

A Decentralized Mandate

The final decision will rest with Hyperliquid’s validators in an on-chain vote. In a significant move to ensure a fair and community-driven outcome, the Hyperliquid Foundation has announced it will abstain from voting.

By vowing to side with the majority, the foundation takes its hands off the wheel—shutting down fears of centralization and making clear that the decision rests entirely with stakeholders.

September 14th will be more than a vote—it will be a test of how far DeFi governance has come, shifting from symbolic fee-switch debates to billion-dollar contracts awarded by community vote.

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