The crypto industry is buzzing with Hyperliquid’s planned USDH stablecoin issuance, which has led to a bidding war between various protocols. While Paxos, Frax, Agora, and Native Markets were already pushing to power USDH, Sky had now also joined the race on Monday with a plan that made use of its $8 billion balance sheet.
Previously known as MakerDAO, Sky is already managing USDS and DAI stablecoins, worth around $13 billion, making it the fourth and fifth largest stablecoin issuers.
In a post on X, Rune Christensen, one of the founders of Sky, said, “By using Sky to power USDH, the Hyperliquid community will gain unbeatable advantages that no other stablecoin project can offer.”
Christensen also proposed notable terms, including 4.85% returns on all USDH held in Hyperliquid. This rate is higher than the current yields on Treasury bills. The money will go toward buying back HYPE tokens and the platform’s Assistance Fund.
Sky’s plan includes $2.2 billion in instant redemption liquidity through the protocol’s Peg Stability Module. This feature lets big traders quickly convert USDH at scale. The firm also says it will invest $25 million in “Hyperliquid Genesis Star” to help get DeFi development going on the platform. The protocol plans to move its buyback engine, which makes more than $250 million a year, to Hyperliquid.
The Competition is Tough
As a leading decentralized perpetual exchange, Hyperliquid has over $5.5 billion in USDC deposits, which is about 7.5% of the stablecoin’s total supply.
Apart from Sky, four other protocols in the race have also pushed forward favorable terms for issuing USDH stablecoin. These are Paxos, Frax, Agora, and Native Markets. Paxos has promised 95% of reserved earnings and zero fees for USDC migration, while Agora has pledged 100% of net revenue for HYPE buybacks.
Meanwhile, Native Markets, which was the first protocol to send a proposal for USDH, promises a share of the reserve proceeds to Hyperliquid’s Assistance Fund, minting within the ecosystem, and following the rules. Frax Finance is a community-based model that gives users back 100% of the treasury’s profits. This arrangement is different from Sky’s revenue-sharing model.
An on-chain vote on September 14, 2025, will decide the outcome for the Hyperliquid community. The vote is one of the most closely watched developments in DeFi this year because whichever protocol wins the deal will have a huge amount of power in the stablecoin market.
Also Read: Stripe Faces Competition for Hyperliquid’s USDH Stablecoin
