Ethena Labs has made the decision to step back from the competition for the issuance of the USDH stablecoin on the Hyperliquid platform. This decision comes after community concerns were raised about Ethena’s status as a non-native team within the ecosystem.
In a post on X by Ethena, founder Guy Young acknowledged the concerns raised by validators and delegates regarding Ethena’s lack of native ties to Hyperliquid, its broader product ambitions beyond USDH, and the perception that its growth strategy was not fully aligned with the platform. As a result, Ethena has withdrawn its proposal for the USDH stablecoin issuance.
Young congratulated the rival Native Markets team, which is now favored to lead the stablecoin issuance on Hyperliquid. He praised the governance process of Hyperliquid for demonstrating how smaller, community-driven projects can succeed regardless of pedigree or financial backing.
Ethena had initially proposed issuing USDH through Anchorage Digital Bank’s upcoming USDtb token, collateralized by BlackRock’s $2 billion BUIDL fund. Despite the support from BlackRock’s head of digital assets and Anchorage’s CEO, validators were swayed against Ethena’s bid due to concerns about centralization and its external focus.
Following the withdrawal from the USDH competition, Ethena plans to pivot to building native products within the Hyperliquid ecosystem. These products include Hyperliquid-native synthetic dollars, USDe-enabled savings and card spending tools, and new derivatives like equities-based perpetual swaps. The team also intends to leverage its $13 billion USDe balance sheet to provide liquidity and expand Hyperliquid’s markets.
Despite the setback, Ethena remains dedicated to developing within Hyperliquid and aims to be a key player in the platform’s ecosystem. The outcome of this decision marks a turning point for Hyperliquid, as local builders are given preference by community governance over outsiders. The control of USDH’s future by Native Markets could shape the exchange’s risk profile and growth trajectory for years to come.