The Race for Hyperliquid’s USDH: Paxos, Ethena, and Sky Compete to Lead the Stablecoin Frontier

The battle for control of Hyperliquid’s new stablecoin, USDH, has intensified as major players in the crypto industry make their bids to become the issuing entity. Hyperliquid’s innovative governance process has drawn fierce competition, with notable contenders Paxos, Ethena Labs, and Sky Protocol vying for supremacy in a decision that could reshape the decentralized finance (DeFi) landscape.

Hyperliquid’s USDH: A New Contender in the Stablecoin Arena

Hyperliquid recently announced its plans to launch a new stablecoin, USDH, aiming to reduce dependency on USDC while capturing interest income from reserves. The ambition is clear: establish USDH as a viable and attractive option in the stablecoin market—a sector crucial for DeFi transactions. Several companies, including Paxos, Frax Finance, Agora, and Ethena Labs, have expressed interest in issuing this new digital asset.

Paxos and PayPal Partnership: A Strategic Move in the Stablecoin Race

Paxos is leveraging its strategic alliance with financial giants PayPal and Venmo to enhance its proposal. Their plan includes the integration of USDH into PayPal’s payment ecosystem, making transactions smoother and providing outlets for merchants and fintech companies. Additionally, their compliance credentials and potential for yield-generating products mark Paxos as a formidable contender.

• Once USDH’s Total Value Locked (TVL) hits $1 billion, Paxos promises to channel profits into expansion efforts, after which they’ll retain only 5% of the revenue.
• The collaboration comes with a $20 million ecosystem incentive from PayPal.

Ethena Labs: Leveraging USDtb and Strategic Partnerships

Ethena Labs is positioning itself as a key player with its unique approach to backing USDH. Their proposal ties USDH to USDtb reserves, aligned with BlackRock’s investment funds, and features offerings such as ‘Hyperliquid native synthetic dollar’, driving deeper integrations.

• Ethena plans to distribute 95% of reserve returns to the Hyperliquid community.
• A robust incentive program worth up to $150 million is slated to encourage ecosystem adoption and cover transition costs from USDC to USDH.

Sky Protocol: Banking on Robust Stability and a Proven Track Record

Formerly known as MakerDAO, Sky Protocol enters the competition with an established reputation in issuing stablecoins. Their proposal capitalizes on their history and liquidity solutions.

• USDH will be minted through DAI and USDS, leveraging $2.2 billion USDC in liquidity.
• Sky promises a 4.85% yield, surpassing traditional U.S. Treasury returns, with plans to reinvest earnings into the ecosystem.
• Their $25 million ‘Hyperliquid Genesis Star’ incubator aims to seed new DeFi projects.

Countdown to Decision: Charting a Future for Hyperliquid

As the deadline approaches for proposal submissions and the subsequent voting phase, the excitement mounts for what promises to be a pivotal moment in the realm of DeFi and stablecoins. The selection of USDH’s issuer will not only establish the future path of Hyperliquid but also set a precedent in aligning traditional finance integrations within the decentralized world.

Firm decision dates include submission deadline on September 10th, positions declaration on September 11th, and voting from September 14th. The result will shape whether Hyperliquid opts for corporate integration, deep DeFi assimilation, or a compliance-first strategy in its ongoing development.