TLDR
- Hyperliquid’s USDH stablecoin launched Wednesday with $2 million in early trading volume
- Native Markets secured issuance rights through validator vote, beating major competitors like Paxos and Ethena
- USDH is backed by cash and US Treasury securities to reduce reliance on external stablecoins
- The selection process faced criticism for appearing to favor Native Markets over established firms
- Revenue from reserves will fund HYPE token buybacks and ecosystem development through 50-50 split
Hyperliquid’s native stablecoin USDH went live Wednesday, generating over $2 million in trading volume within hours of launch. The USDH/USDC pair opened at 1.001, marking a milestone for the decentralized derivatives exchange.
The launch provides Hyperliquid with its first dollar-pegged asset native to the platform. USDH operates on HyperEVM, Hyperliquid’s Ethereum-compatible layer, allowing seamless circulation across the network.
Native Markets will oversee the stablecoin’s management and potential billions in future flows. The startup team includes Hyperliquid investor Max Fiege, former Uniswap Labs president Mary-Catherine Lader, and blockchain researcher Anish Agnihotri.
The company won issuance rights through a validator vote on September 14. USDH uses cash and US Treasury equivalents as backing, with Stripe’s Bridge platform managing reserves.
Controversial Selection Process
The bidding process began September 5 when Hyperliquid opened governance for USDH ticker allocation. Native Markets submitted their proposal immediately after the announcement.
Major industry players entered competing bids over following days. Paxos, Sky, Frax Finance, Agora, Curve, OpenEden, and Bitgo all submitted proposals before the deadline.
The selection drew criticism from industry observers. Dragonfly managing partner Haseeb Qureshi argued the process appeared designed to favor Native Markets from the start.
Qureshi claimed multiple bidders reported validators showed no interest in alternative proposals. He questioned whether Native Markets received advance notice given their immediate response to the announcement.
Critics also highlighted that a new startup won over established stablecoin issuers with proven track records. Native Markets secured victory with over two-thirds of validator support despite the controversy.
Strategic Impact and Competition
USDH addresses Hyperliquid’s heavy dependence on external stablecoins. USDC currently represents over 90% of platform deposits, creating reliance on Circle’s infrastructure.
The native stablecoin implements a 50-50 revenue sharing model. Half of reserve income funds HYPE token buybacks while remaining proceeds support ecosystem development initiatives.
This structure keeps yield within Hyperliquid’s ecosystem rather than flowing to external providers. The approach could help retain liquidity and strengthen platform economics.
Hyperliquid faces increasing competition in perpetuals trading. Aster, operating on BNB Chain, recorded nearly $30 billion daily volume Wednesday compared to Hyperliquid’s $10 billion.
The exchange’s market share has declined from 70% in May to approximately 35% currently. HYPE token dropped 7% over the past week according to CoinGecko data.
USDH represents Hyperliquid’s first major governance decision since decentralization. The launch positions the platform to reduce external dependencies while capturing more value from its growing ecosystem.
Trading volume continues building as users explore the new stablecoin option. Native Markets now manages what could become billions in flows as Hyperliquid expands its user base and trading activity.
