Decentralized exchange (DEX) and Layer-1 blockchain Hyperliquid is preparing to launch its native USDH stablecoin. The USDH ticker, reserved by the Hyperliquid Foundation, will be awarded to a development team through a transparent, on-chain validator vote scheduled for September 14.

Each team is required to submit proposals via Hyperliquid’s Discord channel, with validators deciding the winner through a quorum process followed by a gas auction. Paxos, Agora, and Frax are the three major competitors for the stablecoin contract.

Paxos Pitches Regulatory-First USDH with HYPE Token Buybacks

Paxos submitted a proposal to deploy USDH, emphasizing compliance with the US GENIUS Act and the EU’s MiCA regulations. It aims to leverage institutional partnerships with PayPal, Venmo, and Interactive Brokers to boost its chances of being awarded the stablecoin launch.

The company proposes directing 95% of USDH reserve earnings toward repurchasing HYPE tokens, Hyperliquid’s governance token, to distribute to validators, protocols, and users. The model seeks to align USDH with Hyperliquid’s ecosystem while reinforcing HYPE’s utility.

Paxos also plans to list HYPE across its brokerage network, which could potentially boost the token’s visibility and adoption.

Agora Coalition Vows Neutrality Amid Stripe Controversy

Agora has positioned itself as a key candidate to take over the USDH stablecoin deployment through a growing coalition with other companies. The new group emphasizes neutrality and consistency with Hyperliquid’s principles in their approach to deploying the stablecoin.

In a post on X, CEO Nick Van Eck said Agora’s proposal brings together its institutional-grade stablecoin infrastructure, Rain’s global card and on/off-ramp network, and LayerZero’s interoperability to support its USDH to the protocol.

Agora promises 100% of net revenue for HYPE buybacks or contributions to the Hyperliquid Assistance Fund, supported by institutional custodians and consumer-facing payment rails.

The coalition’s proposal has gained traction and support among the crypto community, but concerns also linger about the coalition’s ability to deliver on its ambitious promises.

Frax Finance Proposes Community-Driven USDH with Full Yield Distribution

Frax Finance, known for its multichain infrastructure and frxUSD stablecoin, has also shown interest by submitting a proposal that focuses on community empowerment.

The company promised to distribute 100% of USDH’s underlying yield from US Treasury securities to Hyperliquid users via on-chain infrastructure. Frax said its USDH would be fully backed by frxUSD and US Treasuries custodied by asset managers such as BlackRock, with redemptions available across frxUSD, USDC, USDT, and fiat.

It further emphasized that Hyperliquid’s governance will retain ultimate control, positioning its bid as a decentralized alternative. Some community members, however, question whether Frax’s multichain focus dilutes Hyperliquid’s “Hyperliquid-first” mandate.

Hyperliquid Validators To Vote on USDH Issuer and Ticker

Hyperliquid revealed that a validator vote to select the team deploying the USDH stablecoin has been scheduled for September 14, according to a Discord announcement. It stated that all applicants must submit their proposals via Discord by September 10, detailing plans for a Hyperliquid-aligned, compliant USD stablecoin.

The exchange’s 21 validators will vote on-chain by submitting the wallet address of their chosen team, with the emerging issuer to proceed to finalize deployment via a gas auction. The voting process is stake-weighted, meaning validators with more staked HYPE tokens will have more impact on the outcome. Validators must publicly declare their preferred team by September 11, allowing users to select which pick aligns with their choice.

USDH’s Potential Impact On Hyperliquid

The USDH launch coincides with a major platform upgrade, including an 80% reduction in taker fees for spot trading and increased maker rebates to boost liquidity. Hyperliquid’s trading volume hit $400 billion in August, cementing its dominance in DeFi derivatives trading with an 80% market share. Dragonfly’s Omar Kanji estimates that a full migration to USDH could generate $220 million in annualized revenue for HYPE token holders, potentially disrupting Circle’s USDC dominance on the platform.

HYPE’s price has surged 8% in the past 24 hours. rising to $50.75 at publication time, per CoinGecko data.