Hyperliquid's Ambition Soars: Launches USDH to Race for Stablecoin Supremacy, Competing for Ecosystem Pricing Power

Original Article Title: "Hyperliquid's Ultimate Ambition: Creating Its Own 'Ecosystem Dollar' USDH"

Original Source: BitpushNews

Editor's Note: Last Friday, Hyperliquid announced the launch of a "Hyperliquid-first, Hyperliquid-compliant USD-pegged stablecoin" and reserved the USDH token code for it. Subsequently, several stablecoin issuers including Paxos, Frax Finance, Ethena Labs, and Agora have quickly joined the competition for the issuance rights of USDH stablecoin. This article provides an analysis of Hyperliquid's plan to issue USDH and its ecosystem significance. The following is the content of the original article:

In the current intense competition among decentralized exchanges (DEXs), Hyperliquid has become one of the most talked-about platforms this year due to its remarkable growth rate and expanding product lineup.

Yesterday, the foundation announced that it will launch its own USD-pegged stablecoin, USDH, through on-chain governance. This move not only signifies Hyperliquid's desire to gradually reduce its reliance on Circle USDC but is also interpreted by the community as a key step in constructing a "self-sustaining" mechanism and perfecting its ecosystem loop.

Following the announcement, Hyperliquid's native token HYPE surged to $47.63. Although it retraced slightly afterward, according to CoinGecko data, its price still maintained a 4% increase in the past 24 hours.

From "Rising Star" to "Dark Horse": Hyperliquid's Strong Rise

By 2025, Hyperliquid had rapidly risen from a second-tier platform to the top DEX camp with its strong trading activity. According to DeFiLlama data, the platform's contract transaction volume reached as high as $398 billion in August, and its spot trading volume also reached $200 billion.

On August 25th, its Bitcoin spot trading volume briefly surpassed that of CEXs Coinbase and Bybit.

Its capital accumulation is equally remarkable: at the beginning of the year, Hyperliquid's total value locked (TVL) was only $317 million, but by September, it had soared to $25 billion, achieving nearly an eight-fold increase. All of this indicates that Hyperliquid is rapidly gaining users' favor, becoming a significant hub for capital and trading liquidity.

In this context, the launch of its own stablecoin USDH by Hyperliquid appears to be a strategic move.

For an exchange, holding a stablecoin not only reduces external dependencies but also allows the interest income from the stablecoin reserves to be converted into a driving force for its own development, truly achieving "self-sufficiency."

USDH Issuance Mechanism: Decentralized Governance Led

Unlike mainstream stablecoins, the issuance of USDH is not determined by a single company but rather decided through Hyperliquid's on-chain governance system.

Initially, Hyperliquid has reserved a code name for USDH. Next, the team will open submissions for proposals outlining how to issue and operate this stablecoin. Subsequently, validators will decide which team wins during a five-day voting period.

Even if authorized, the team must participate in the "on-chain gas auction for spot deployment on Hyperliquid Layer1" to go live. This means that the issuer of USDH is not pre-determined by the foundation but rather emerges through community competition.

This design not only reflects the spirit of decentralization but also allows Hyperliquid to enhance community participation and cohesion through the governance process. Moreover, the foundation clearly states that USDH must be "compliant," laying a compliant foundation for its future stable operation against the backdrop of new regulations like the GENIUS Act.

Differences from USDT and USDC

The stablecoin market is currently dominated by USDT and USDC, with both having a combined market share of over 80%. In comparison, USDH is positioned with more of an "ecosystem-native" characteristic.

Firstly, the issuing entities differ. USDT and USDC are issued by centralized companies like Tether and Circle, with the reserve funds managed by the companies; whereas USDH is deployed by a team elected through governance voting, aligning more with the positioning of "protocol-native assets."

Secondly, the use cases differ. USDT and USDC cover almost the entire crypto ecosystem and are universal settlement tools. On the other hand, USDH primarily serves the internal transactions of Hyperliquid, becoming the exclusive stable asset for derivatives, settlements, and liquidity pools.

Most importantly, the profit-sharing models differ. The reserve interest of USDT and USDC is enjoyed solely by the issuing companies, whereas once operational, the reserve income of USDH may be redistributed through governance, flowing back to validators or the community. This aspect transforms Hyperliquid's stablecoin into not just a payment tool but also a "blood circulation system" that drives ecosystem growth.

In terms of transparency and compliance, USDT has always been under scrutiny, USDC has gained some trust through Circle's background, and Hyperliquid explicitly emphasizes the compliance of USDH and combines its operation with on-chain governance, theoretically increasing transparency.

Community Controversy

It is worth noting that the announcement of the USDH plan has just sparked intense community debate.

The developer of the ecosystem's long-standing stablecoin protocol, Hyperstable, Max, was the first to speak out. He pointed out that in the past, the USDH code name had been blacklisted, forcing them to only use "USH" as the stablecoin symbol. Now, the foundation has suddenly unblocked USDH, making Hyperstable feel that the rules have been temporarily changed, "which is extremely unfair to a team that has already invested heavily in resources."

At the same time, another candidate team, Native Markets, also sparked controversy with their proposal. Community members discovered that the team's wallet received funding from Hyperliquid only hours before the announcement was made, and their proposal was detailed and seemed well-prepared. This raised suspicions of whether they had prior knowledge of the news, and even whether they had some undisclosed relationship with the foundation.

Supporters argue that unblocking USDH was not a "behind-the-scenes operation," but rather a result of changes in the compliance environment following the GENIUS Act. Since the external environment has changed, the rules naturally need to be adjusted. Behind the debate is skepticism about whether Hyperliquid can maintain governance neutrality and treat developers fairly.

A New Stage in the Stablecoin Race

The larger context is that the stablecoin market itself is entering a new phase of expansion. According to DeFiLlama data, the total global stablecoin market value has exceeded $285 billion, with a growth of over 5% in the past week. Tether's USDT holds a 58% share, followed closely by USDC.

At the same time, industry giants and emerging players are entering the field: MetaMask is collaborating with infrastructure provider M0 to launch mmUSD; payment giant Stripe is also partnering with Bridge to issue an internal stablecoin. In this trend, Hyperliquid's USDH is not an isolated attempt but part of a larger wave, where exchanges, public chains, wallets, and payment companies all hope to control their own currency systems to reduce external dependencies and capture the long-term benefits brought by reserve assets.

If USDH can be successfully launched, it will be an important step for Hyperliquid to achieve "self-bootstrapping," and it also means that it is no longer satisfied with just being a trading platform, but has taken a substantial step towards building a complete financial ecosystem. Next, it depends on how the community reaches consensus and takes action; the story is just beginning.

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