TLDR
- Sky enters USDH race with $8B firepower, yield edge, and multichain support.
- Sky bids for Hyperliquid USDH, offering 4.85% yield and deep liquidity.
- $8B-backed Sky joins USDH contest, blending yield, scale, and compliance.
- Sky pushes USDH plan: higher yields, $2.2B liquidity, and cross-chain use.
- With DAI & USDS legacy, Sky vies to power USDH and shape Hyperliquid’s future.
Sky has formally entered the competition to issue Hyperliquid USDH, becoming the fifth major crypto protocol to submit a proposal. Backed by its $8 billion balance sheet and a B- credit rating from S&P, Sky aims to bring yield, liquidity, and multichain support. This move intensifies the contest over who will power Hyperliquid USDH, a contract tied to a protocol that handled nearly $400 billion in trading volume last month.
Sky Offers High Yield, Deep Liquidity, and Regulatory Flexibility
Sky’s proposal promises a 4.85% return on all Hyperliquid USDH held on the platform, surpassing U.S. Treasury bill rates. This yield is backed by Sky’s Peg Stability Module (PSM), which also provides $2.2 billion in instant redemption liquidity. The stablecoin would be compatible with LayerZero, allowing seamless use across multiple blockchains.
Sky introduces regulatory customization options for Hyperliquid USDH, aligning with compliance frameworks like the GENIUS Act. This allows the stablecoin to remain flexible across jurisdictions, giving users and partners multiple deployment choices. The GENIUS-compliant version would restrict yield payouts, while other variants could remain yield-bearing.
Sky also committed $25 million to launch a Hyperliquid-native ecosystem project called Genesis Star. Inspired by Sky’s Spark protocol, which manages over $1 billion in assets, this initiative will issue exclusive tokens. These efforts aim to bootstrap DeFi activity on Hyperliquid and attract significant on-chain liquidity.
DAI and USDS Track Record Strengthens Sky’s Bid
Sky’s experience launching and managing stablecoins, including DAI and USDS, gives it a competitive advantage. These coins currently account for a combined $12.5 billion in circulation, supported by over $13 billion in collateral. Sky has operated for seven years without losing user funds, even during extreme market conditions.
The proposal for Hyperliquid USDH builds upon this infrastructure and ensures transparency, precise collateral tracking, and rigorous risk controls. Sky plans to link the USDH framework directly to Hyperliquid’s trading system, creating tighter integration than rival proposals. This alignment aims to make Hyperliquid USDH central to the platform’s financial infrastructure.
Sky also intends to migrate its $250 million annual profit buyback engine to Hyperliquid. This system currently supports Sky’s token price on other platforms and will help increase trading volume within Hyperliquid. This migration signals Sky’s broader commitment to embedding its ecosystem within Hyperliquid.
Competing Proposals Offer Unique Features and Partnerships
The race to issue Hyperliquid USDH includes four other contenders: Paxos, Frax, Agora, and Native Markets. Each protocol has pitched distinct advantages tailored to Hyperliquid’s requirements. Paxos focuses on regulatory reach, offering compliance with global laws and promising 95% of reserve earnings to HYPE token buybacks.
Frax proposes a “wrapper” model where 100% of the yield is returned to the users rather than the protocol. Agora, supported by MoonPay and State Street, promises neutrality and full net revenue allocation to HYPE buybacks. Native Markets faces scrutiny due to its affiliations with Stripe and potential conflicts with wallet provider Privy.
Validators will vote on the winning proposal after Hyperliquid’s upcoming upgrade, which remains unscheduled. The decision will shape how Hyperliquid USDH operates and which model of governance, compliance, and returns it follows. As the deadline nears, competition grows sharper, and each protocol is mobilizing its strongest assets.
