Ethena Withdraws from USDH Race, Native Markets In the Lead

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Ethena Labs, the team behind USDe, has withdrawn from the race to issue Hyperliquid’s USDH stablecoin.

This can reshape the governance vote, where several top crypto teams are battling for control. 

Why Did Ethena Withdraw?

Ethena was one of the leading contenders, but the team decided to step back after taking on board feedback from community members and validators. In a recent post on X, founder Guy Young acknowledged the following key concerns. 

• They are not a Hyperliquid-native team
• They have other product lines beyond USDH
• Their ambitions go beyond a single partner exchange

Young notes that while the outcome seems clear, they are withdrawing its USDH proposal, giving validators the freedom to support other teams.

Young also congratulated Native Markets, calling their success a perfect example of what makes Hyperliquid special. “It is a level playing field where emergent players can win the hearts of the community and are given a fair shot at succeeding,” he said. 

Markets React: Ethena Drops 3%

Ethena (ENA) fell nearly 3% after the team withdrew from Hyperliquid’s USDH stablecoin contest. USDH is designed as a native digital dollar, and several top teams, including Native Markets, Agora, Sky, Frax Finance, and Paxos are competing to issue it.

Native Markets, the lead contender, is proposing a Hyperliquid-native stablecoin via Stripe’s Bridge, offering yield-sharing to the Assistance Fund and HYPE token buybacks.

The USDH vote is Hyperliquid’s first major governance decision beyond routine changes. The final vote is set for Sunday, 10:00–11:00 UTC.

Ethena was also one of the top contenders. Its initial bid proposed issuing USDH via Anchorage’s USDtb token, backed by BlackRock’s $2B BUIDL fund. It also pledged to return 95% of reserve revenues to Hyperliquid through community funds, buybacks, or validator rewards.

Native Markets Leads, but Critics Question Fairness

Polymarket now gives Native Markets over 90% chance of winning the USDH bid, with Paxos following next. However, not everyone agrees the process has been fair.

Haseeb Qureshi, managing partner at Dragonfly believes this whole USDH RFP was basically custom made for Native Markets, despite proposals from established teams like Ethena, Paxos, and Agora over the brand-new Native Markets. 

Native Markets’ proposal came out right after the USDH RFP was announced, giving them a clear head start while other teams rushed to put theirs together over the weekend.

What’s Next For Ethena on Hyperliquid?

Despite the setback, Ethena will continue moving forward on Hyperliquid, with the following plans. They are collaborating with native teams to develop-

• hUSDe native synthetic dollars
• USDe-powered savings and card products
• Hedging flows on Hyperliquid

Additionally, Ethena is exploring the wide design space of HIP-3 markets, including-

• Reward-bearing trading collateral
• Modular prime broking
• Perpetual swaps on equities

Despite stepping back from the USDH race, Ethena remains committed to building innovative products that push the ecosystem forward.