- Ethena Labs joins the contest to issue USDH stablecoin.
- Significant partnerships and community-focused returns proposed.
- Potential shift in DeFi liquidity and governance.
Ethena Labs has officially entered the contest to become the issuer of Hyperliquid’s USDH stablecoin, with a proposal promising substantial returns and institutional-grade backing announced on September 9, 2025.
The contest could shift DeFi liquidity and governance dynamics, impacting stablecoins and derivative trading as Ethena leverages institutional support and significant ecosystem incentives.
Ethena Labs in the Race for USDH
Ethena Labs has officially entered the competition to issue Hyperliquid’s native USDH stablecoin. The proposal includes promises of substantial returns for the community and commitments from significant institutional partners.
Institutional Partnerships
The main players in the bid for USDH issuance include entities such as Ethena Labs, Paxos, and Frax. Ethena offers partnerships with institutions like BlackRock, focusing on institution-grade backing for USDH. “Our commitment to returning 95% of net reserve revenue to the Hyperliquid community underscores our focus on community engagement and ecosystem growth,” said Guy Young, Founder/CEO of Ethena Labs. Learn more.
Impact on DeFi Markets
Immediate impacts include potential shifts in DeFi markets, with USDC currently holding a prominent position at stake. The migration to USDH may affect its role and liquidity. Robert Mitchnick, Head of Digital Assets at BlackRock, emphasized the significance of institutional backing, saying:
“We are excited to enable Ethena’s USDtb, which is 100% backed by BUIDL and uniquely positioned to offer institutional grade cash management as well as on-chain liquidity to Hyperliquid users.”
Incentives and Community Investment
Ethena proposes to return 95% of net reserve revenue to the Hyperliquid community and pledges $75 million in incentives, impacting community investment and economic activities. Read more.
Broader Implications
The stablecoin landscape may see alignment changes impacting major cryptocurrencies, with effects rippling to trading volumes and derivatives markets. Historical precedents suggest similar migrations have impacted liquidity and governance tokens. Ethena’s proposal, leveraging institutional support, could herald a new direction in DeFi stablecoin offerings.
