Bidders vying to build Hyperliquid’s stablecoin are swarming the protocol.So far, six organisations have posted proposals on the protocol’s Discord server after Hyperliquid announced it will launch a stablecoin on Friday, a move that will reduce its dependency on external issuers.The plan is to let the validators who run the network decide who will get the privilege of purchasing the right to launch the stablecoin, which will trade under the ticker USDH.Hyperliquid is the biggest perpetual futures exchange in DeFi. It handled a whopping $378 billion in trading volume over the past month, per DefiLlama data. However, it currently denotes its spot markets using Circle’s USDC and Tether’s USDT stablecoins, the two biggest stablecoins on the market.Hyperliquid’s USDH will compete with USDC and USDT on the protocol, reducing its dependency on third-party stablecoins, and potentially capturing additional revenue.Validators will be able to vote on their preferred proposal after Hyperliquid’s next network upgrade, a date for which has yet to be announced.Here are the four proposals gaining the most traction among the Hyperliquid community. PaxosThe biggest firm to submit a proposal so far is Paxos, the New York-based fintech behind several stablecoins, including PayPal USD and Global Dollar. It proposes using 95% of the interest earned on USDH’s reserve assets, like short-dated treasury bonds, to fund buybacks of the HYPE token. The firm plans to back USDH with US Treasury Bills, repurchase agreements, and its Global Dollar stablecoin. Paxos has a track record of contributing to multiple Hyperliquid ecosystem projects, including LHYPE, a tokenised leveraged loop trade, and WHLP, a tokenised representation of Hyperliquid’s HLP vault.Community feedback to Paxos’ proposal has been largely positive.FraxFrax Finance, the issuer of the Frax Dollar stablecoin, is the biggest DeFi protocol to join the fray.It wants to issue USDH natively on Hyperliquid against its frxUSD stablecoin, giving holders the ability to mint and redeem the tokens across frxUSD, USDC, USDT, and US dollars.Frax hasn’t given any concrete plans on what it would do with the interest earned on reserve assets, but said it could be used to boost HYPE staking yield, conduct buybacks of the HYPE token, or used for rebates to active traders or rewards for USDH holders.Community feedback has been mostly positive, however some have questioned whether Frax is as aligned with Hyperliquid as the other organisations submitting proposals.AgoraAgora styles itself as a white-label stablecoin issuer, using its AUSD stablecoin to back other dollar-pegged assets.The firm said it plans to share 100% of net revenue from USDH’s reserve assets to fund buybacks of the HYPE token. Reserves for an Agora-issued USDH will be administered by State Street and VanEck, the same firms that Agora uses for its AUSD reserves.Agora also said it could potentially bring USDH to new users by working with consumer-facing apps like EtherFi. Feedback has been positive, but some have questioned what Agora’s incentive to issue and manage a USDH is if it plans to send all revenue minus custodian fees to Hyperliquid.Native MarketsNative Markets is a new organisation put together specifically to compete for the right to issue USDH. It is led by Max Fiege, a Hyperliquid ecosystem investor and advisor.Native Markets said it will back USDH with offchain reserves initially managed by BlackRock and onchain reserves managed by Superstate through stablecoin platform Bridge, which is owned by Stripe. The group proposes using 50% of the interest earned on reserve assets to buy back the HYPE token, with the other 50% set aside to fund USDH growth.Several governance participants have warned that Native Markets relying on Bridge for stablecoin issuance could present a single point of failure.Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.Bidders vying to build Hyperliquid’s stablecoin are swarming the protocol.So far, six organisations have posted proposals on the protocol’s Discord server after Hyperliquid announced it will launch a stablecoin on Friday, a move that will reduce its dependency on external issuers.The plan is to let the validators who run the network decide who will get the privilege of purchasing the right to launch the stablecoin, which will trade under the ticker USDH.Hyperliquid is the biggest perpetual futures exchange in DeFi. It handled a whopping $378 billion in trading volume over the past month, per DefiLlama data. However, it currently denotes its spot markets using Circle’s USDC and Tether’s USDT stablecoins, the two biggest stablecoins on the market.Hyperliquid’s USDH will compete with USDC and USDT on the protocol, reducing its dependency on third-party stablecoins, and potentially capturing additional revenue.Validators will be able to vote on their preferred proposal after Hyperliquid’s next network upgrade, a date for which has yet to be announced.Here are the four proposals gaining the most traction among the Hyperliquid community. PaxosThe biggest firm to submit a proposal so far is Paxos, the New York-based fintech behind several stablecoins, including PayPal USD and Global Dollar. It proposes using 95% of the interest earned on USDH’s reserve assets, like short-dated treasury bonds, to fund buybacks of the HYPE token. The firm plans to back USDH with US Treasury Bills, repurchase agreements, and its Global Dollar stablecoin. Paxos has a track record of contributing to multiple Hyperliquid ecosystem projects, including LHYPE, a tokenised leveraged loop trade, and WHLP, a tokenised representation of Hyperliquid’s HLP vault.Community feedback to Paxos’ proposal has been largely positive.FraxFrax Finance, the issuer of the Frax Dollar stablecoin, is the biggest DeFi protocol to join the fray.It wants to issue USDH natively on Hyperliquid against its frxUSD stablecoin, giving holders the ability to mint and redeem the tokens across frxUSD, USDC, USDT, and US dollars.Frax hasn’t given any concrete plans on what it would do with the interest earned on reserve assets, but said it could be used to boost HYPE staking yield, conduct buybacks of the HYPE token, or used for rebates to active traders or rewards for USDH holders.Community feedback has been mostly positive, however some have questioned whether Frax is as aligned with Hyperliquid as the other organisations submitting proposals.AgoraAgora styles itself as a white-label stablecoin issuer, using its AUSD stablecoin to back other dollar-pegged assets.The firm said it plans to share 100% of net revenue from USDH’s reserve assets to fund buybacks of the HYPE token. Reserves for an Agora-issued USDH will be administered by State Street and VanEck, the same firms that Agora uses for its AUSD reserves.Agora also said it could potentially bring USDH to new users by working with consumer-facing apps like EtherFi. Feedback has been positive, but some have questioned what Agora’s incentive to issue and manage a USDH is if it plans to send all revenue minus custodian fees to Hyperliquid.Native MarketsNative Markets is a new organisation put together specifically to compete for the right to issue USDH. It is led by Max Fiege, a Hyperliquid ecosystem investor and advisor.Native Markets said it will back USDH with offchain reserves initially managed by BlackRock and onchain reserves managed by Superstate through stablecoin platform Bridge, which is owned by Stripe. The group proposes using 50% of the interest earned on reserve assets to buy back the HYPE token, with the other 50% set aside to fund USDH growth.Several governance participants have warned that Native Markets relying on Bridge for stablecoin issuance could present a single point of failure.Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.