The stablecoin industry is currently experiencing a heated contest for control over a new dollar-pegged token, USDH, which analysts believe could shape the future of stablecoins. According to a report by Bloomberg, a fierce bidding war took place on Hyperliquid, a rapidly growing crypto trading platform, with the prize being the exclusive right to issue USDH, the platform’s native stablecoin.
Prominent names in the industry such as Paxos, Sky, and Ethena initially participated in the competition but later withdrew their bids, leaving the field open for Native Markets, a startup backed by Stripe stablecoin subsidiary Bridge, to emerge as the winner. Despite being a relatively new player in the market, Native Markets’ affiliation with Stripe gave it an edge over its more established competitors.
Stablecoins play a crucial role in decentralized finance by providing a dollar-backed medium for collateral, settlement, and payments within various applications. What started as a grassroots community-led sector has now transformed into a battleground for institutions and payment companies looking to generate revenue from interest on reserves. For example, Circle and Coinbase have a partnership where they share proceeds from USDC to stabilize earnings during market fluctuations.
The competition for issuing USDH on Hyperliquid showcased the intense rivalry in the stablecoin industry. Paxos, Agora, and Ethena all made lucrative revenue-sharing offers to secure the contract, but Native Markets’ strategic ties to Stripe’s acquisition of Bridge and the subsequent launch of the Tempo blockchain proved to be decisive.
The selection process also highlighted the importance of regulatory compliance and operational speed. While Paxos operates under a New York trust charter and is seeking a federal license, Bridge holds money transmitter approvals in 30 states. Native Markets, on the other hand, emphasized regulatory flexibility and rapid deployment in its bid for USDH.
Despite concerns about centralization, Hyperliquid reassured its community that it would remain neutral and support multiple stablecoins. The contest over USDH underscored a new reality in the stablecoin industry, where branding, partnerships, and business strategy are becoming just as crucial as technological innovation.
In conclusion, Native Markets securing the mandate to issue USDH on Hyperliquid marks a significant milestone in the evolution of stablecoins. With the platform aiming to reduce its reliance on USDC and strengthen its spot markets, the launch of USDH could reshape the dynamics of stablecoin liquidity and revenue generation. As Hyperliquid continues to expand its offerings and improve its services, it is poised to compete with the major players in decentralized finance and solidify its position in the market.