Key Takeaways
- Ethena has withdrawn from the race to issue Hyperliquid’s USDH stablecoin.
- The third-largest stablecoin issuer faced resistance from validators prioritizing native alignment.
- Founder Guy Young emphasized Ethena’s multi-ecosystem focus beyond USDH.
The competition to issue Hyperliquid’s native stablecoin, USDH, has taken an unexpected turn.
Ethena Labs—seen by many as one of the strongest contenders—has abruptly withdrawn its proposal following pushback from the Hyperliquid community.
USDH’s launch process, structured as a community-driven request for proposals (RFP), has attracted some of the biggest names in the stablecoin and asset management sector.
Candidates promised aggressive revenue-sharing models, offering to recycle up to 100% of reserve income back into Hyperliquid’s ecosystem.
For a brief moment, Ethena appeared well-positioned to capture the mandate.
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Ethena’s Proposal Meets Resistance
On Sept. 9, Ethena entered the race as the sixth candidate.
With a track record in synthetic dollars and risk-managed stablecoin structures such as USDe, its expertise seemed a natural fit.
Early commentary even labeled Ethena the “ideal partner” for USDH.
Yet validators and community members voiced skepticism.
The primary concern was alignment: Ethena operates across multiple chains and product lines, leading some in the Hyperliquid community to question whether it could remain fully committed to a “native-first” project.
That skepticism translated into votes. By Sept. 11, Ethena controlled only 8% of validator stake, far behind Native Markets’ commanding 70%. Paxos trailed at 16.5%, with the remainder unallocated.
Founder’s Response and Withdrawal
Faced with dwindling support, Ethena founder Guy Young took to X to announce the firm’s exit.
“It appears the decision is a near certainty now, and we will respectfully be withdrawing our proposal to allow validators to signal their support elsewhere,” he wrote.
Young added that USDH issuance had become “the least interesting part” of Ethena’s roadmap, citing falling Treasury bill yields and the need to prioritize broader initiatives. Those include:
- hUSDe: native synthetic dollars.
- USDe-enabled savings, cards, and hedging products.
- HIP-3 markets, featuring modular prime broking and equity perpetuals.
What Comes Next for USDH
With Ethena stepping aside, the race now narrows around Native Markets, which appears to be consolidating validator support, and Paxos, the only other serious contender.
A final vote is scheduled for Sept. 14.
While Ethena’s exit narrows the field, it also highlights a larger theme in stablecoin competition: the tension between scale and native alignment.
For Hyperliquid’s validators, choosing a partner appears less about global stature and more about ecosystem loyalty.
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