Intensifying Competition in the Stablecoin Market: A New Era for Decentralized Finance
A heated competition for control over a new dollar token has set the stage for what analysts predict will be the next phase of the stablecoin industry. According to a report by Bloomberg, a bidding war unfolded on Hyperliquid, one of the fastest-growing trading platforms in crypto, where the prize was the right to issue its native stablecoin. This intense competition has highlighted the importance of branding, partnerships, and business strategy in the stablecoin market, in addition to technological prowess.
The competition attracted some of the biggest names in the sector, including Paxos, Sky, and Ethena, which later withdrew its offer, as well as the lesser-known Native Markets, a startup backed by Stripe’s stablecoin subsidiary. At the weekend, Hyperliquid validators granted the USDH contract to Native Markets, despite its relatively new status, thanks to its connection with Stripe, which helped it outbid more established competitors.
Hyperliquid Stablecoin Race: Where Branding and Partnerships Matter
Stablecoins are the backbone of decentralized finance, providing a dollar-backed medium for collateral, lending, and payments across all applications. What started as a sector led by upstarts has evolved into a battleground for institutions and payment companies vying for interest income from reserves. For instance, Circle shares its USDC with Coinbase as part of a partnership to stabilize earnings during market fluctuations.
The Hyperliquid competition offered a rare glimpse into the intense rivalry, with Paxos promising not to take any revenue until USDH exceeded $1 billion. Agora offered to share 100% of the net revenue with Hyperliquid, while Ethena provided 95%. However, Native Markets outbid them all, thanks to its connections to the $1.1 billion Bridge acquisition and the subsequent launch of the Tempo blockchain, making it a strong candidate.
“Every stablecoin issuer is extremely desperate to offer,” said Zaheer Ebrahim, co-founder of Split Capital. “They’re willing to publicly announce how much they’re willing to offer. It just shows that it’s a very tough business for stablecoin issuers.” While USDC dominates with over $5.6 billion on Hyperliquid, the arrival of USDH could shift the dynamics and sales.
Native Markets Secures USDH Stablecoin Mandate on Hyperliquid
Hyperliquid has completed its governance vote for the USDH stablecoin, and after a closely watched process that took weeks of community debate and competing proposals, the mandate was awarded to Native Markets. USDH, described by Hyperliquid as a “Hyperliquid-first, compliant, and more robust” token, aims to reduce the platform’s dependency on USDC and strengthen its spot markets.
Validators for the decentralized exchange voted for Native Markets, a relatively new player backed by Stripe’s Bridge subsidiary, over established competitors like Paxos and Ethena. The outcome was followed by a number of suggestions that offered aggressive terms to win validator support, underlining the extent of the incentives associated with controlling USDH.
The exchange on Hyperliquid is a critical hub for stablecoin liquidity, with $5.7 billion in USDC, around 8% of its total supply, currently held in the network. With the prevailing financial returns, this translates to an estimated $200 million to $220 million in annual revenue, highlighting why a native alternative could be transformative.
Native Markets has planned a gradual rollout for USDH, starting with capped and repayable attempts before extending into spot markets. Its reserves are managed by BlackRock in cash and government bonds, with on-chain tokenization by Superstate and Bridge. The yield from these reserves is divided between the Hyperliquid auxiliary fund and ecosystem development.
The launch of USDH is timely, as Hyperliquid records profits from Eway futures trading, with a turnover of $106 million accepted in August alone, and prepares to reduce trading fees by 80% to strengthen liquidity. Analysts say this move positions Hyperliquid to capture more of the stablecoin economy internally, a significant step in its bid to compete with the largest players in decentralized finance.
For more information on this developing story, visit https://cryptonews.com/news/usdh-power-struggle-ignites-stablecoin-bidding-wars-across-defi-bloomberg/
