TLDR
- Native Markets wins Hyperliquid’s USDH stablecoin contract after defeating Paxos and Ethena
- Ethena withdrew from bidding process citing community infrastructure concerns
- Paxos offered PayPal integration and $20M incentives but lost validator support
- Native Markets will launch USDH with $800 transaction limits during testing phase
- Critics question selection process transparency and validator independence
Native Markets has won the highly contested bid to develop Hyperliquid’s USDH stablecoin, defeating payment giant Paxos and other competitors in a community governance vote that concluded Sunday.
The victory gives Native Markets control over what could become one of the most integrated stablecoins in decentralized finance. Hyperliquid operates as a leading perpetual futures exchange with over $1 billion in daily trading volume.
Max Fiege, Native Markets founder, announced the team will submit the first Hyperliquid Improvement Proposal for USDH within days. The stablecoin will launch as an ERC-20 token compatible with Ethereum’s network.
The initial rollout includes careful testing phases to ensure stability. Native Markets plans to limit mints and redemptions to $800 per transaction during early stages before opening full access.
Paxos PayPal Integration Fails to Win Validators
Paxos mounted a strong campaign despite ultimately losing the USDH contract. The established payment processor revised its proposal midweek to include deeper PayPal and Venmo integration.
The Paxos offer included zero-cost on-ramps and off-ramps for users. The company also committed $20 million in incentives to drive USDH adoption across the Hyperliquid ecosystem.
Paxos agreed to redirect all USDH revenue toward Hyperliquid’s growth until the platform reaches $1 billion total value locked. The company would cap its revenue share at 5% once TVL exceeds $5 billion.
Despite these concessions, Paxos failed to secure crucial validator support. Native Markets had already gained endorsements from key validator groups including CMI Trading before the final vote.
Ethena Exit Clears Path for Native Markets Victory
Ethena’s Thursday withdrawal from the USDH race cleared the path for Native Markets’ decisive win. The synthetic stablecoin issuer cited community concerns about its non-native infrastructure.
Prediction markets immediately shifted after Ethena’s exit. Native Markets’ odds spiked above 99% on Polymarket heading into the weekend vote.
Some industry executives questioned the bidding process fairness. Haseeb Qureshi from venture firm Dragonfly suggested validators had predetermined the outcome through private agreements.
Native Markets pitched an integrated reserve strategy combining traditional and crypto assets. BlackRock will manage cash and Treasury holdings off-chain while Superstate handles on-chain tokenized assets through Stripe’s Bridge infrastructure.
