Hyperliquid Faces Tough Competition as Ethena Proposes USDH Plan

TLDR

• Ethena Labs has become the sixth bidder for Hyperliquid’s USDH stablecoin.
• Ethena’s proposal includes backing USDH entirely by USDtb, a stablecoin tied to BlackRock’s BUIDL fund.
• The team pledges to return 95% of USDH reserve revenue to the Hyperliquid community.
• Ethena commits at least $75 million in ecosystem incentives, which could rise to $150 million.
• The proposal includes a partnership with Securitize to bring tokenized funds and equities to HyperEVM.

The competition for control of Hyperliquid’s USDH stablecoin has intensified. Ethena Labs has entered the fray, becoming the sixth bidder. This move marks a significant step in Hyperliquid’s search for a stablecoin issuer that can support its rapidly growing decentralized finance (DeFi) platform. The decision will determine which bidder controls billions in liquidity and revenue on one of DeFi’s fastest-growing derivatives exchanges.

Ethena Proposes USDH Backed by USDtb

Ethena’s proposal for Hyperliquid’s USDH stablecoin centers on USDtb, a stablecoin linked to BlackRock’s BUIDL fund. The team behind USDe and USDtb plans to back USDH entirely by USDtb, which will be issued through Anchorage Digital Bank. Ethena has pledged to return 95% of reserve revenue to the Hyperliquid community, signaling its commitment to decentralization.

To address potential security risks, Ethena proposes a “guardian network” of elected validators to oversee USDH. The team emphasizes that this structure would limit centralized control and enhance oversight. Ethena’s proposal also includes a commitment to covering the migration costs of Hyperliquid’s markets from USDC to USDH.

Ethena Proposes $150M Incentives for Hyperliquid

Ethena’s plan includes at least $75 million in ecosystem incentives, with the potential to rise to $150 million. This commitment aims to ensure the growth and stability of the Hyperliquid ecosystem. In addition to stablecoin infrastructure, Ethena intends to partner with Securitize to bring tokenized funds and equities to HyperEVM.

Ethena’s bid also includes launching a Hyperliquid-native synthetic dollar, hUSDe. This new asset could further bolster Hyperliquid’s offering and appeal within the DeFi space. The team is focused on providing instant liquidity routes through its existing stablecoin infrastructure to facilitate smooth transitions and enhance liquidity.

HYPE Reaches All-Time High Amid USDH Bidding

Ethena’s entry follows proposals from five other contenders: Paxos, Frax Finance, Agora, Native Markets, and Sky. Sky’s most recent proposal outlined a plan to back USDH with a 4.85% yield. Meanwhile, Agora’s proposal promises to return 100% of USDH reserve revenue to the Hyperliquid community, appealing to supporters of decentralized finance.

Hyperliquid has already opened a community process to select a USDH issuer. The outcome will be decided after the next network upgrade, when validators will cast their formal votes. The date for the upgrade has not yet been announced.

As bidding intensifies, Hyperliquid’s native token, HYPE, hit an all-time high of $55.04. This milestone reflects growing interest and confidence in Hyperliquid’s future within the DeFi ecosystem.

The post Hyperliquid Faces Tough Competition as Ethena Proposes USDH Plan appeared first on Blockonomi.