USDH Power Struggle Sparks Stablecoin “Bidding Wars” in DeFi

A fierce competition for control over a new dollar-pegged token is paving the way for what experts predict could shape the future of the stablecoin sector. Reports from Bloomberg reveal that a bidding war erupted on Hyperliquid, one of the fastest-growing trading platforms in the crypto space, with the right to issue USDH, its native stablecoin, at stake.

Key Takeaways:

Bidding War for USDH: Hyperliquid’s USDH stablecoin sparked fierce competition among various industry participants.
Strategic Partnerships Matter: Native Markets won due to its strong ties with Stripe, showcasing that branding and partnerships can outweigh established technology.
Stablecoin Market Dynamics: The competition emphasizes the intertwining of strategy, branding, and revenue-sharing models in the evolving landscape of stablecoins.
USDH Rollout: Native Markets plans a phased approach for the USDH stablecoin, indicating a significant shift in Hyperliquid’s operational strategy and revenue opportunities in DeFi.

Several prominent names from the industry participated, such as Paxos, Sky, and Ethena, who eventually withdrew their bids. They were also accompanied by the lesser-known Native Markets, a startup supported by Stripe's stablecoin subsidiary, Bridge.

Hyperliquid Stablecoin Contest Highlights Importance of Branding and Partnerships

Over the past weekend, Hyperliquid’s validators—those who secure the network and decide on crucial matters—chose to award the USDH contract to Native Markets.

🏆 Native Markets has secured the USDH ticker for @HyperliquidX's native stablecoin, emerging as the winner in a heated governance vote. #Paxos #USDH — Cryptonews.com (@cryptonews) September 15, 2025

Despite being relatively new, Native Markets leveraged its connection with Stripe to outpace more established competitors.

Stablecoins play a crucial role in decentralized finance (DeFi) by offering a dollar-backed means for collateral, settlement, and payments across various applications. What started as a community-driven movement has now become a battleground for institutions and payment firms looking to earn from their reserves' interest. For instance, Circle shares revenue from its USDC stablecoin with Coinbase to stabilize their earnings during volatile market periods.

The Hyperliquid competition showcased the fierce intensity of this market. Paxos committed to not taking any revenue until USDH reached $1 billion in circulation. Agora proposed sharing 100% of its net revenue with Hyperliquid, while Ethena offered 95%. Native Markets eventually outbid them, buoyed by its ties to Stripe's $1.1 billion acquisition of Bridge and the subsequent launch of the Tempo blockchain.

“Every stablecoin issuer is extremely desperate for supply,” stated Zaheer Ebtikar, co-founder of Split Capital. “They are openly showing how much they are willing to offer, indicating that this business is very tough for stablecoin issuers.”

While USDC remains the dominant player on Hyperliquid with over $5.6 billion in deposits, the introduction of USDH could alter financial flows and revenue structures. Paxos co-founder Bhau Kotecha remarked on the exchange’s growth as a significant opportunity, while Agora’s co-founder Nick van Eck cautioned that allowing the contract to go to a vertically integrated issuer could risk centralizing the market.

Regulatory aspects also played a key role in the discussions. Paxos operates under a New York trust charter and is seeking a federal license, while Bridge has money transmitter approvals in 30 states. Native Markets highlighted regulatory flexibility and prompt deployment as reasons for its selection.

Hyperliquid confirmed that strong engagement from its community validated the selection process. Circle CEO Jeremy Allaire dismissed concerns about USDC, suggesting that competition ultimately benefits the ecosystem. Analysts argued that fears of centralization might be overblown, noting Hyperliquid's likely neutrality in supporting multiple stablecoins.

Despite these tensions, the competition for USDH emphasized a new reality for stablecoins—branding, partnerships, and strategic business practices are becoming just as significant as technology in this sector.

Native Markets Clinches USDH Stablecoin Contract on Hyperliquid

Hyperliquid has finalized its governance vote for the USDH stablecoin, awarding the contract to Native Markets after a thorough review process involving community debate and competitive proposals. USDH, characterized by Hyperliquid as a “Hyperliquid-first, compliant, and natively minted” dollar-pegged token, aims to decrease the platform's reliance on USDC and strengthen its spot markets.

The validators on the decentralized exchange opted for Native Markets, a relatively new entity supported by Stripe’s Bridge subsidiary, over more established contenders like Paxos and Ethena.

All USDH proposals explained here: pic.twitter.com/tq1cA2NWP9 — Galaxy Research (@glxyresearch) September 11, 2025

The outcome came after several proposals offering attractive revenue-sharing arrangements to encourage validator support, highlighting the significant incentives tied to dominating USDH.

Hyperliquid’s platform has become a vital source of stablecoin liquidity, currently with $5.7 billion in USDC—making up roughly 8% of its total supply. This translates to approximately $200 million to $220 million in annual revenue for Circle at prevailing treasury yields, underscoring the transformative potential of a native option.

With the governance vote concluding on September 15, Native Markets is set to initiate a phased rollout for USDH, starting with capped minting and redemption trials before fully launching in the spot markets.

Native Markets has been awarded the USDH ticker on Hyperliquid.

Thank you to all HYPE stakers and network validators for their dedicated efforts in evaluating the proposals submitted. — max.hl (@fiege_max) September 14, 2025

Its reserve management strategy includes cash and treasuries handled by BlackRock, with tokenization facilitated via Superstate and Bridge. The income generated from these reserves will be allocated between Hyperliquid’s Assistance Fund and ecosystem development.

The USDH launch coincides with Hyperliquid achieving record revenues from perpetual futures trading, bringing in $106 million in August alone, while also planning to reduce spot trading fees by 80% to increase liquidity.

Analysts believe this move positions Hyperliquid to capture a more significant share of the stablecoin economics internally, marking a major step in its pursuit to compete with the leading players in the decentralized finance landscape.