Ethena Shakes Up Hyperliquid With Bold USDH Stablecoin Proposal

The stablecoin race is intensifying, and Hyperliquid, one of the fastest-growing decentralized trading ecosystems, is now at the center of it. The platform is preparing to select the official issuer of its native stablecoin, USDH, through a competitive bidding process that has drawn attention from some of the biggest names in the industry.

Among the contenders Paxos, Frax, Agora, Native Markets, and Sky one name has quickly risen to the top of the conversation: Ethena Labs. Known for its pioneering work with synthetic stablecoins, Ethena has submitted a proposal that blends institutional-grade credibility, community-oriented incentives, and DeFi-native governance.

With its promise of 95% revenue sharing, up to $150 million in ecosystem incentives, and BlackRock-backed collateral, Ethena’s USDH stablecoin proposal represents one of the most ambitious bids in the history of decentralized finance. Let’s dive into why this matters and what it could mean for Hyperliquid’s future.

What Is Ethena’s USDH Proposal?

Ethena Labs is no stranger to stablecoins. Its USDe token has already become one of the largest by market cap, handling billions in minting and redemption volume with zero downtime. Building on this momentum, Ethena has set its sights on Hyperliquid’s USDH.

The proposal is straightforward yet strategically innovative: USDH would be fully backed by Ethena’s USDtb stablecoin. Unlike other crypto-collateralized tokens, USDtb derives its strength from BlackRock’s BUIDL tokenized money market fund and is issued through Anchorage Digital Bank, a federally chartered U.S. financial institution.

This layered structure creates a stablecoin that offers:

• Institutional-grade asset backing from the world’s largest asset manager.

• Regulatory compliance and custodial security through a U.S.-chartered bank.

• On-chain liquidity and transparency, making it suitable for DeFi trading at scale.

In other words, Ethena is attempting to bridge Wall Street credibility with DeFi-native functionality.

Read Also: USDH: Hyperliquid’s Stablecoin to Rival USDC and USDT

Core Features of Ethena’s Stablecoin Proposal

Ethena’s bid distinguishes itself through a package of financial incentives, governance mechanisms, and infrastructure commitments that aim to make USDH not just another stablecoin, but a growth engine for Hyperliquid.

1. Institutional-Grade Backing

USDH would rely on USDtb reserves, fully collateralized by BlackRock’s BUIDL fund. This isn’t just a crypto experiment, it’s a stablecoin built on real-world, low-risk assets, offering a level of stability and auditability that other bidders struggle to match.

2. 95% Net Revenue Sharing

Ethena pledges to return 95% of net revenue generated from USDH reserves to the Hyperliquid ecosystem. The funds would be used for HYPE token buybacks and community incentives, ensuring that value flows directly back to users rather than being siphoned away by the issuer.

3. $75M–$150M Ecosystem Incentives

To turbocharge adoption, Ethena is putting serious money on the table: a guaranteed $75 million incentive pool, expandable to $150 million if adoption targets are met. These funds will encourage liquidity providers, traders, and developers to integrate USDH deeply into the ecosystem.

4. Full Migration Cost Coverage

Recognizing the friction that comes with transitioning trading pairs, Ethena is offering to cover the costs of migrating Hyperliquid’s USDC pairs to USDH. This lowers barriers to adoption, making it easy for traders to shift seamlessly.

5. Guardian Network Governance

Ethena’s governance model proposes a “guardian network” of elected Hyperliquid validators. This decentralized body would oversee USDH operations, with emergency powers to freeze funds or reissue tokens in case of breaches. It’s a compromise between security and decentralization, reducing the risk of centralized control.

6. Proven Operational Track Record

Ethena’s USDe stablecoin serves as proof of execution. With billions in volume processed and zero outages, Ethena has shown it can handle complex, large-scale stablecoin operations. For Hyperliquid, this track record reduces uncertainty.

Read Also: Fireblocks Debuts New Stablecoin Payments Network to Boost Efficiency

Ethena vs. Other USDH Bidders

The Hyperliquid USDH bidding process has attracted serious contenders, but Ethena’s proposal stands out for its scale and credibility.

• Paxos brings strong regulatory credentials but has a more conservative incentive structure.

• Frax offers innovative algorithmic designs but lacks the institutional-grade asset base that USDtb provides.

• Agora, Native Markets, and Sky lean heavily into DeFi-native strategies but do not have BlackRock’s endorsement or comparable financial commitments.

Where others specialize in either TradFi alignment or DeFi innovation, Ethena is uniquely positioned at the intersection of both worlds.

Read Also: Stablecoin Volume Hits $2.5T as Supply Peaks, But Fragmentation Remains

Why USDtb Backing Matters for Hyperliquid

The decision to back USDH with USDtb is more than symbolic, it provides a structural advantage that could redefine stablecoin trust within DeFi.

1. Institutional Reliability – BUIDL money market funds provide low volatility and predictable yields.

2. Regulatory Strength – Anchorage Digital Bank ensures compliance and custody within U.S. legal frameworks.

3. Deep On-Chain Liquidity – Seamless transactions minimize slippage and support large-scale trading.

4. Transparent Auditing – Regular reports from BlackRock-backed reserves enhance trust in the peg.

This creates a dual assurance model: traditional financial rigor on one side, and DeFi-native liquidity on the other.

Read Also: Ripple Stablecoin RLUSD Hits $700M as Expansion Moves Into Africa

The Bigger Picture: Ethena, Hyperliquid, and DeFi’s Evolution

Ethena’s bid for USDH is more than a technical proposal, it’s a statement about the direction of DeFi itself. By merging institutional finance with community-first economics, Ethena is laying a blueprint for how stablecoins of the future might operate.

For Hyperliquid, this proposal could:

• Cement USDH as the backbone of its liquidity layer.

• Drive validator alignment through direct revenue sharing.

• Attract traders seeking stable, transparent collateral with institutional support.

Backed by endorsements from BlackRock’s head of digital assets, Ethena’s approach signals a new era where major financial institutions no longer stand apart from DeFi. They participate in it.

With the validator vote set for September 14, 2025, the Hyperliquid community faces a defining choice: accept an aggressive, institutionally backed proposal that prioritizes revenue sharing and ecosystem growth, or pursue a different vision of what USDH should be.

Conclusion

Ethena Labs has raised the bar in the Hyperliquid stablecoin bidding war with a proposal that combines the best of both financial worlds. By anchoring USDH to BlackRock-backed USDtb, committing to 95% revenue sharing, and pledging up to $150 million in ecosystem incentives, Ethena is signaling a bold vision: a stablecoin that is trustworthy, community-driven, and growth-focused.

Whether the validators approve the proposal or not, one thing is certain: Ethena's bid is shaping the conversation around what stablecoins can and should be in 2025 and beyond.

Read Also: Bank of China Hong Kong Eyes Stablecoin Issuer License by 2025

FAQ

What is Ethena’s USDH proposal?

Ethena Labs proposes to issue Hyperliquid’s native stablecoin, USDH, backed by USDtb collateral linked to BlackRock’s tokenized money market fund.

How does Ethena’s proposal benefit Hyperliquid?

It promises 95% revenue sharing, $75M–$150M in incentives, migration cost coverage, and validator-driven governance.

Why is BlackRock’s involvement important?

BlackRock’s BUIDL fund provides institutional credibility, regulatory compliance, and transparent asset backing for USDtb, which supports USDH.

What makes Ethena different from other bidders?

Ethena uniquely combines institutional-grade collateral with aggressive DeFi incentives, unlike Paxos, Frax, and other bidders.

When is the validator vote?

The Hyperliquid validator vote is scheduled for September 14, 2025.

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