USDH is a native, dollar-pegged stablecoin that launched on the Hyperliquid decentralized exchange ecosystem on September 24, 2025. ^{[12] [15]} The stablecoin was created to internalize yield revenue for the Hyperliquid ecosystem, enhance protocol sovereignty, and reduce reliance on external, bridged stablecoins. Following a competitive bidding process, Native Markets was selected to issue the stablecoin after winning an on-chain vote of the network's validators that concluded on September 14, 2025. ^{[11] [16]}​

USDH is a fiat-collateralized stablecoin backed by cash and U.S. Treasury equivalents. Its hybrid reserve model uses BlackRock to manage off-chain assets and Superstate for on-chain tokenization of the reserves. ^{[16] [17]} Issuance and compliance are handled via Stripe’s "Bridge" payment processor. Native Markets directs 50% of the reserve yield to HYPE token buybacks and allocates the remaining 50% to ecosystem growth initiatives. ^{[1] [10]}​

Overview

The initiative to create USDH was driven by Hyperliquid's strategic goal to internalize value, enhance protocol sovereignty, and reduce security risks associated with its reliance on external, bridged stablecoins. ^[6] Prior to the proposal, the Hyperliquid platform held approximately 150 million to $220 million for the Hyperliquid ecosystem. This phenomenon was identified as significant "value leakage." ^{[1] [19]}​

Furthermore, dependence on a centralized, permissioned asset like USDC exposed Hyperliquid to potential censorship and asset freezes, which conflicted with its objective of operating as a permissionless financial system. The use of bridged assets also introduced an additional layer of security risk that a native stablecoin would eliminate. ^[17] In response to this initiative, Circle announced plans to deploy native USDC on Hyperliquid and enable its Cross-Chain Transfer Protocol (CCTP) to compete with the newly launched USDH and retain its market share. The USDH selection process has been viewed as setting a new precedent in the stablecoin market, shifting the dynamic from issuers offering a product to providing a service where they must compete on value-sharing with host ecosystems. ^[1]​

Issuer Selection Process

​Hyperliquid opted for a competitive bidding process to select the issuer for USDH, inviting established stablecoin firms and new teams to submit proposals by September 10, 2025. ^[7] The stated goal was to find a "Hyperliquid-first, Hyperliquid-aligned, and compliant" asset. ^[8] Validator priorities coalesced around three key themes: native issuance on Hyperliquid's chains, transparent and enforceable revenue sharing, and protocol sovereignty over reliance on a single regulated entity. ^[19]​

The winning proposal was determined through a transparent, on-chain, stake-weighted vote by the Hyperliquid network's validators, which concluded on September 14, 2025, and required a two-thirds supermajority for approval. ^[17] Native Markets won the bid, securing over 66% of the final vote, while runner-up Paxos received 28%. ^{[11] [16]} The community's choice of Native Markets, despite its 50% revenue share proposal being less generous than offers from competitors, signaled a preference for perceived ecosystem alignment and agility over maximizing direct revenue. ^[16]​

To ensure neutrality and community influence, the Hyperliquid Foundation pledged to "effectively abstain by voting for the team with the most non-Foundation votes." ^[18] In a significant governance change on September 11, 2025, Hyperliquid announced it removed its team's staked HYPE tokens from the validator weighting calculation for the vote. This move was intended to create a "pure governance structure," reduce insider influence, and give greater control to community token holders. The decision directly impacted the vote's dynamics, reducing the leading contender Native Markets' voting weight from 75% to 66% and increasing the possibility of Paxos winning the bid. ^{[2] [9]}​

Controversy

The announcement and bidding process were met with some controversy. The Hyperstable protocol, an existing stablecoin project on Hyperliquid, called the process "unfair." A representative for the project claimed that the USDH ticker had previously been blacklisted by the Hyperliquid Foundation, forcing their team to use the USH ticker instead. They argued that changing this policy after other projects had already launched was shifting the goalposts. ^[8]​

Suspicions of foul play were also raised regarding the Native Markets proposal. Some community members noted that the proposal was submitted just over an hour after the official announcement, yet was long and thoughtfully written, suggesting the team may have been given a "heads-up." ^[8] Scrutiny revealed that the Native Markets deployer address was funded by a newly created wallet that had itself been funded only five hours before the announcement. ^[19] Dragonfly co-founder Haseeb Qureshi called the process "a bit of a farce" and alleged it was "fixed from the start," suggesting that it appeared insiders had already determined that Native Markets would win. ^{[9] [19]} Lilian Aliaga, COO of OAK Research, also suggested "bias is at play" when questioning how a newcomer like Native Markets could so quickly garner a majority of validator support. In defense of the process, Ethena Labs founder Guy Young, whose firm withdrew from the race, praised it as a "level playing field where emergent players can win the hearts of the community." ^[18]​

Competing Proposals

Eight teams initially submitted proposals to issue USDH, with a key differentiator being the revenue-sharing model. Most bidders pledged to return a significant portion of the yield generated from stablecoin reserves to the Hyperliquid ecosystem, primarily through buybacks of the native HYPE token. ^[9]​

Native Markets

Native Markets, a team founded by community advocate Max Fiege, former Uniswap Labs President MC Lader, and blockchain researcher Anish Agnihotri, was the first to submit a proposal and was considered a frontrunner throughout the process. ^[18] The proposal outlined a GENIUS-compliant, fiat-collateralized USDH issued via Stripe’s "Bridge" payment processor. The reserves, consisting of cash and Treasuries, would be overseen by BlackRock and Superstate. The revenue model proposed using 50% of the interest earned on reserve assets to buy back the HYPE token, with the other 50% set aside to fund USDH growth. ^{[1] [7]}​

Paxos

​Paxos, a prominent stablecoin issuer supported by PayPal, submitted a proposal on September 7, 2025, for a fiat-collateralized USDH. The initiative was led by its recently formed Paxos Labs entity. The stablecoin would be backed by U.S. T-bills and repurchase agreements. The company pledged to direct 95% of the interest generated from reserves toward HYPE buybacks. The proposal highlighted that its stablecoin would be compliant with emerging regulations like the U.S. GENIUS Act and the EU's MiCA framework, emphasizing its strong regulatory standing via its NYDFS trust charter. ^[19] As part of its bid, Paxos also announced an offer from the Kraken exchange to list both USDH and HYPE if its proposal were selected. ^{[1] [7]}​

Ethena Labs

​Ethena Labs proposed a synthetic dollar model for USDH, to be backed by USDtb, a tokenized security linked to BlackRock’s BUIDL fund, with support from partners Anchorage Digital and Securitize. The proposal included returning 95% of the net revenue to the Hyperliquid community and committing a minimum of $75 million in incentives. Despite being considered a strong contender by some market analysts, Ethena Labs officially withdrew its bid on September 11, 2025. The decision was made in response to community and validator feedback that questioned the firm's positioning within the ecosystem and expressed a preference for a native Hyperliquid team. ^{[3] [5]}​

Sky (formerly MakerDAO)

​Sky, the protocol behind the USDS and Dai (DAI) stablecoins, proposed an overcollateralized USDH backed by a mix of crypto and real-world assets. In a departure from the buyback model, Sky offered to provide a direct yield of 4.85% to all USDH holders. The bid was hampered, however, as its core protocol resides on Ethereum, which conflicted with the strong validator priority for a natively issued asset on Hyperliquid. ^{[4] [19]}​

Agora

​Agora, a firm co-founded by Nick van Eck, proposed a fiat-collateralized stablecoin backed by cash and short-term U.S. Treasurys. Agora pledged to channel 100% of the net revenue generated from reserves back into the Hyperliquid ecosystem through HYPE buybacks or contributions to the platform's Assistance Fund. The firm positioned itself as a neutral partner with no competing Layer 1 blockchain interests. ^{[18] [10]}​

Frax Finance

​Frax Finance, a DeFi-native stablecoin protocol, proposed a fiat-collateralized model for USDH based on its frxUSD stablecoin. After initial community feedback, the team pivoted to commit to native issuance on HyperEVM. The proposal suggested that interest earned on reserve assets could be used to boost HYPE staking yield or conduct HYPE token buybacks. ^{[1] [19]}​

Launch and Market Performance

The USDH stablecoin officially went live on the Hyperliquid mainnet on September 24, 2025. ^[12] The launch was conducted in phases, beginning with a closed testing period with an $800 transaction cap before a full public release. ^[17] A USDH/USDC spot market was introduced on the exchange's HyperCore network to bootstrap liquidity and facilitate conversion from the incumbent stablecoin. ^[14]​

In the initial hours of trading, the stablecoin saw significant activity, with trading volumes surpassing 15 million worth of USDH was pre-minted in the 24 hours leading up to the launch. ^[13]​

By late November 2025, USDH demonstrated stable performance, consistently trading around its 0.995 and an all-time high of 7 million and $9 million. ^[20]​

Market Impact and Reception

The competitive bidding process for USDH had a notable impact on the market, particularly on Hyperliquid's native token, HYPE. The focus of most proposals on using reserve yield for HYPE buybacks contributed to the token's price reaching repeated all-time highs, including a peak price of 5 billion of USDC from circulation.

According to prediction market Polymarket, Native Markets was heavily favored to win the bid, with bettors giving the startup around 92% odds as of September 12, 2025. ^[18] Data from before the vote showed Native Markets holding over 30% of the delegated stake, with the next-largest contender, Paxos, holding 7.6%. ^[9]​