Hyperliquid, a leading decentralized exchange and layer-1 blockchain in the crypto world, is currently navigating one of the most hotly contested governance battles in recent memory. At the center of the storm is a proposal to launch a proprietary stablecoin, USDH, which could potentially replace the $5.5 billion worth of USDC that currently dominates 95% of Hyperliquid’s stablecoin supply. The decision is not just about which token will take the helm; it’s about who will control a monetary layer potentially generating hundreds of millions in revenue from yields on U.S. Treasuries.
The Stakes of the USDH Proposal
The upcoming validator vote on September 14 will determine which entity will issue USDH, making it a pivotal moment for Hyperliquid and its community. Heavyweight bidders like Paxos, Frax, and a coalition involving Agora and MoonPay have entered the fray, each with their unique vision for USDH. However, the proposal linked to Stripe’s Bridge platform has sparked the most intense debate, with community members expressing concerns about ceding economic control to a potential competitor.
Nick van Eck, CEO and co-founder of Agora, has been vocal in his opposition to Stripe’s involvement. In his view, allowing Stripe, which is developing its own blockchain, Tempo, and controls wallet infrastructure through its acquisition of Privy, to issue USDH would be akin to surrendering the exchange’s economic sovereignty. As he pointedly remarked, “If Hyperliquid relinquishes their canonical stablecoin to Stripe, a vertically integrated issuer with clear conflicts, what are we even doing?”
Diverse Proposals and Differing Visions
The field of contenders is crowded, each bringing a distinct approach to how USDH should operate. Paxos, leveraging its decade-long experience as a regulated issuer, has proposed allocating 95% of reserve earnings into HYPE token buybacks. Frax, on the other hand, has put forward a “community-first” model, pledging to pass 100% of Treasury yield directly to users with zero take.
Agora’s proposal emphasizes neutrality and alignment with the Hyperliquid ecosystem, promising to channel 100% of net revenue into HYPE buybacks or Hyperliquid’s Assistance Fund. This pitch is bolstered by the participation of MoonPay, whose President, Keith Grossman, has emphasized the company’s extensive licenses and verified user base, positioning it as a more credible alternative than Stripe or Bridge. Grossman underscored the importance of scale and credibility for USDH, dismissing what he termed as “BS capture.”
The Crowded Field and Potential Entrants
With Ethena hinting at a possible entry, the lineup of bidders could become even more complex. Each proposal not only offers a different operational model but also a varied vision of USDH’s role within the Hyperliquid ecosystem. From Paxos’ regulatory-first approach to Frax’s user-yield model to Agora’s coalition-backed strategy, the diversity of options reflects the multifaceted nature of stablecoin governance.
Hyperliquid, which commands nearly 80% of the DeFi derivatives market, understands the lucrative potential of issuing its native stablecoin. The right to do so is a highly coveted prize, and the competitive landscape is only intensifying as the deadline for proposals looms on September 10. More proposals are anticipated in the next 48 hours, potentially adding further layers to an already intricate contest.
The Role of the Hyperliquid Foundation
In a move that underscores the importance of decentralized governance, the Hyperliquid Foundation has announced it will “effectively abstain” from the decision, leaving the outcome entirely in the hands of validators. This abstention is a testament to Hyperliquid’s commitment to a community-driven process, though it also places significant pressure on validators to weigh the various proposals carefully.
As the validator vote approaches, the Hyperliquid community is abuzz with discussions about the potential implications of each proposal. The decision will not only shape the future of USDH but also influence the broader trajectory of the Hyperliquid platform and its role in the DeFi landscape.
Community Concerns and Hopes
While the debate is fierce, it’s also a reflection of the vibrant and engaged community that Hyperliquid has fostered. Many community members express a desire for a stablecoin that aligns with Hyperliquid’s values and mission, rather than simply the most commercially advantageous option. The discussions highlight the delicate balance between innovation, economic control, and community alignment.
As Hyperliquid’s validators prepare to cast their votes, the crypto world watches closely, aware that the outcome will reverberate far beyond the immediate ecosystem. Whether USDH becomes a beacon of community-driven innovation or a cautionary tale about economic sovereignty in the digital age remains to be seen, but one thing is certain: the stakes have never been higher.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
