Ethena Labs Enters the USDH Race
Ethena Labs has become the sixth project to join the high-stakes contest for Hyperliquid’s USDH stablecoin. The decentralized derivatives exchange holds billions in liquidity, and whoever wins control will help shape its future.
Ethena’s entry underscores the growing intensity of competition among DeFi leaders eager to define USDH’s role in onchain finance.
A USDtb-Backed Stablecoin Vision
Ethena proposes issuing USDH fully backed by USDtb, a stablecoin tied to BlackRock’s BUIDL fund and distributed through Anchorage Digital Bank. This approach promises enhanced transparency and institutional-grade security. By anchoring USDH to USDtb reserves, Ethena aims to create a trusted foundation for Hyperliquid’s liquidity ecosystem.
Guardian Network for Stablecoin Oversight
Unlike centralized models, Ethena’s plan includes a “guardian network” of Hyperliquid validators elected to oversee USDH’s stability. This governance mechanism is designed to decentralize oversight, reduce counterparty risk, and ensure community participation. Ethena also pledges to return 95% of reserve revenue directly to the Hyperliquid community.
Migration Support and Incentives
To smooth the transition, Ethena has promised to cover migration costs from USDC to USDH across Hyperliquid markets. In addition, it plans to allocate at least $75 million in incentives, potentially rising to $150 million, to stimulate adoption. These funds would drive liquidity, trading activity, and long-term ecosystem growth.
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Expanding Hyperliquid’s Infrastructure
Ethena’s proposal extends beyond stablecoin mechanics. It outlines collaborations with Securitize to bring tokenized equities and funds to HyperEVM. This includes launching hUSDe, a synthetic dollar designed for Hyperliquid users, while leveraging Ethena’s existing stablecoin infrastructure to ensure instant liquidity. The goal is to make Hyperliquid a hub for tokenized assets and DeFi innovation.
Competing Bids for USDH Control
Ethena’s entry adds to a crowded field of contenders. Paxos, Frax Finance, Agora, Native Markets, and Sky (formerly MakerDAO) have all submitted competing proposals. Each offers a distinct strategy for USDH issuance, from payment processor integration to algorithmic models. The competition highlights the rising importance of stablecoin design in DeFi’s next growth phase.
Hyperliquid’s Community Process
Hyperliquid has launched a community-driven process to determine USDH’s future issuer. Native Markets was the first to submit, but its proposal involving Stripe’s Bridge payment processor met resistance from community members. With multiple heavyweight bids now on the table, the outcome will likely depend on governance input, technical assurances, and alignment with Hyperliquid’s long-term vision.
