The battle over the stablecoin USDH system: determining the future narrative of Hyperliquid

Author: Ye Su, Source: X, @allen_su1024

Last Friday, Hyperliquid dropped a big bomb on Discord: USDH stablecoin.

It is well known that the market has demystified stablecoins.

However! This time is different, HL is trying to liquidate the idle 5.4 billion USDC for the purpose of repurchasing and distributing HYPE.

In simple terms, just two things:

1. Feed the stablecoin interest margin back to the platform token. There are 5.4 billion USDC lying in the bridge, with an annual interest of 360 million USD. USDH will directly convert this amount into HYPE for buybacks and distribution.

2. Reclaim Sovereign Credit. Circle's USDC can freeze addresses, and the minting rights are not in their own hands. The logic of USDH is to firmly pull back the issuance and control rights to HL.

This time, the public bidding for USDH is also a stage for top players in the stablecoin market. Currently, there are five companies:

Paxos: The Compliant Old Hand. Backed by PayPal/Venmo/Robinhood, it promises to use 95% of its profits to buy back HYPE, keeping just a little for itself. Supported by regulation + institutional channels;

Frax Finance: The most aggressive approach in DeFi. The latest plan directly hands over the governance of USDH to HYPE voting, with 100% of the underlying profits returned, leaving no profit, and fully community-driven;

withAUSD (Rain× LayerZero Labs): Alliance faction. The design is a 100% profit buyback of HYPE, but the custody is entrusted to State Street, and management is handled by VanEck. On the first day, it also requires $10 million in liquidity;

Ethena Labs: Financial Engineering Faction. They are not in a hurry to reveal their cards, but the market understands their combination of derivatives + stablecoins. USDe + USDH, if successful, can solve both hedging and yield capture together.

Native Markets: Ecological Dark Horse. The founder is Max Lader, former COO of Uniswap, who helped incubate Hyperion. Half of the profits go to the ecological fund, and the other half is used for USDH growth (to incentivize frontline applications, HIP-3 market, and promote adoption of HyperEVM projects).

This bidding is not a product competition, but a struggle for institutional routes:

Compliance vs Community vs Alliance vs Financial Engineering vs Dark Horse

Who wins will determine the future narrative of HL.

Imagine this, once it runs smoothly, the price of the coin will take off, and various tracks will compete to imitate, which may give rise to a new track: SBGT (Stable-backed Governance Token).

• In the past, the cryptocurrency market mostly relied on speculation; the quality of the products didn't matter.

• Even if there are high usage rates and real users, it is still difficult for the value to be reflected in the coin price.

The special feature of USDH is that it can directly link the protocol usage rate with the token price. Once successful, other projects are sure to follow suit, potentially sparking a wave of “de-bubbling” in the crypto space.