Hyperliquid’s $5.5 billion Stablecoin Bidding Hits Key Stage

- Major issuers compete for Hyperliquid’s USDH stablecoin contract. - Validators to vote September 14, 2025; proposals due September 10, 2025. Hyperliquid, a market-leading decentralized perpetuals exchange, is conducting a competitive bidding process for its upcoming native stablecoin, USDH. Validators will decide the winner through a vote on September 14. They will consider proposals from contenders including Paxos, Frax Finance, Agora, and Native Markets. Each bidder is presenting a unique strategy to address regulatory compliance, technical adoption, and revenue-sharing. These models aim to align with Hyperliquid’s decentralized ethos and its rapidly growing platform. On September 7, 2025, The Block reported that Hyperliquid launched an initiative to create a "Hyperliquid-first, Hyperliquid-aligned, and compliant USD stablecoin." The company has already reserved the USDH ticker. Hyperliquid designed the stablecoin to integrate deeply within its ecosystem, creating economic incentives for validators and users while ensuring regulatory compliance. Proposals are due by September 10, after which the validator community will vote to determine the winning bid. Paxos, a veteran stablecoin issuer, is using its new Paxos Labs to submit a compliance-focused proposal. The firm committed to adhering to MiCA and GENIUS Act standards and will also deploy USDH natively on HyperEVM and HyperCore. Paxos’s strategy involves using 95% of the interest from reserves for HYPE token buybacks, which the firm will then redistribute to partners, users, and ecosystem initiatives. Additionally, Paxos plans to integrate HYPE into its brokerage infrastructure, which powers crypto services for major platforms like PayPal and Venmo. Frax Finance, known for its innovative frxUSD stablecoin, emphasizes a community-centric approach. The firm’s bid proposes backing USDH 1:1 with frxUSD, which is collateralized by BlackRock's on-chain treasury fund, BUIDL. Frax pledged to programmatically forward 100% of the underlying Treasury yield on-chain to Hyperliquid users. This yield is estimated at approximately $220 million annually based on current deposits, and Frax will not take a fee. The proposal also includes streamlined minting and redemption mechanisms that span stablecoins, fiat, and comply with GENIUS standards. Agora, another competitor, formed a coalition with card provider Rain and interoperability protocol LayerZero for its offer. Agora pledged to share 100% of its net revenue directly with Hyperliquid. Net revenue is defined as revenue minus minimal custodian fees, and Hyperliquid can either contribute these funds to its Assistance Fund or use them for HYPE token buybacks. Agora’s CEO, Nick van Eck, emphasized the firm's neutral stance, asserting that it will not compete against the broader Hyperliquid ecosystem. Like other bidders, Agora’s proposed stablecoin claims full GENIUS compliance. Native Markets, a team directly tied to the Hyperliquid ecosystem, was the first to submit a proposal. Their bid seeks to direct proceeds from reserves to the Assistance Fund and also proposes issuing USDH through Bridge, a platform that Stripe acquired. The team includes notable industry figures like MC Lader, formerly of Uniswap Labs, and blockchain researcher Anish Agnihotri, reinforcing the team's focus on ecosystem alignment and regulatory compliance. Ethena Labs, a rival stablecoin issuer, expressed interest in bidding but had not submitted a formal proposal by the time of reporting. Meanwhile, the Hyperliquid Foundation has stated it will "effectively abstain" from the validator vote to ensure the community's input determines the decision. As of September 7 at 21:09 UTC, Hyperliquid (HYPE) is trading at $47.015. According to CoinMarketCap, its 24-hour trading volume increased by 2.376%. Hyperliquid’s fully diluted market capitalization stands at $47 billion, which represents a 14.47% gain over the past 30 days. These figures highlight the platform's significance in the decentralized finance landscape.