Hyperliquid Removes $HYPE Tokens, Increasing Fairness for USDH Stablecoin Decision

TLDR

• Hyperliquid removes $HYPE tokens from the USDH vote, increasing community control over the stablecoin issuer decision.
• The move gives Paxos a better chance to secure the USDH ticker with their 95% reserve yield buyback proposal.
• Hyperliquid’s governance shift aims to create a more transparent and community-driven selection process for USDH.
• Native Markets remains the leading contender, but the governance change could affect their dominance in the USDH bid.

In a move aimed at creating a more transparent governance structure, Hyperliquid has decided to remove team-staked $HYPE tokens from the USDH vote. This decision reduces the influence of Native Markets, which had a dominant 75% voting weight, lowering it to 66%. The change paves the way for more community control and may significantly impact the ongoing race to issue USDH, Hyperliquid’s stablecoin.

The shift comes as Hyperliquid seeks to involve the broader community in its decision-making process, making the vote more fair and representative of the stakeholders. The governance modification excludes team-staked tokens from the vote weighting, which diminishes the influence that early Hyperliquid backers like Native Markets previously held.

Possible Outcome: Paxos Gaining Advantage

With the removal of team influence in the vote, Paxos, a stablecoin issuer that is GENIUS Act and MiCA compliant, may stand a stronger chance of securing the USDH ticker.

Paxos has proposed that 95% of USDH reserve yield be used for $HYPE token buybacks, a plan that resonates well with the Hyperliquid community due to its potential long-term value accrual for $HYPE holders.

According to Polymarket, Paxos is now one of the top contenders in the USDH bid, alongside Native Markets. Despite Native Markets’ previous favor in the polls, the governance adjustment gives Paxos a fighting chance as the USDH vote heads into its final stages. With Paxos’ track record and regulatory compliance, their proposal offers a solid foundation for Hyperliquid to build upon as it aims for a stablecoin solution that is both compliant and innovative.

Impact of Hyperliquid’s Governance Change

The change in governance structure follows a period of controversy and debate surrounding Native Markets and its close ties to Hyperliquid. Critics had questioned the fairness of the original setup, where Native Markets, co-founded by Max Fiege, held the majority of delegated votes due to its early involvement in the Hyperliquid ecosystem.

By reducing the influence of team-staked $HYPE tokens, Hyperliquid is trying to address concerns about insider control over the decision-making process.

Validators now have a more significant role in determining who will manage the $5.9 billion USDH reserve. This change is expected to foster a more open and democratic approach, giving more weight to community interests.

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