Ethena and Nunchi Partner to Launch nHYPE Liquid Staking Token

Ethena Labs, the synthetic dollar protocol, has partnered with Nunchi, the deployer of a Hyperliquid HIP-3 market, to support the launch of nHYPE, a new liquid staking token developed by Nunchi. The collaboration, announced via an X post, aims to solve the capital requirements for deploying decentralized finance (DeFi) markets on the Hyperliquid exchange. The launch of nHYPE is scheduled for November 28.

Nunchi is preparing for the next phase of its HIP-3 markets, which involves securing the necessary HYPE bond on Hyperliquid. To facilitate this, the protocol is introducing nHYPE, a Liquid Staking Token (LST) designed to represent HYPE that has been staked to support Nunchi’s HIP-3 deployment.

nHYPE to support Nunchi’s YEX launch

nHYPE serves as the primary mechanism for the community to collectively syndicate the HYPE bond required to launch Nunchi’s Yield Exchange (YEX). The YEX is planned as a novel venue for trading perpetual contracts based on yield.

Users staking HYPE mint nHYPE on a 1:1 ratio. This process allows the staked capital to remain liquid and productive while contributing directly to the launch of a new financial primitive on Hyperliquid and simultaneously earning cHIPs (Nunchi Points) and other native yields.

The challenge nHYPE seeks to address stems from the Hyperliquid HIP-3 framework, an innovation that enables permissionless perpetual market deployment but imposes a high barrier to entry. This framework requires a significant HYPE bond to be posted and locked by deployers to ensure security.

For a new protocol or its community, this requirement creates an illiquid capital hurdle. This large, static lockup of funds results in two key problems: Capital Inefficiency, as millions of dollars in HYPE are taken out of productive use, and Community Opportunity Cost, as participants forgo liquidity and the ability to utilize their assets in other DeFi strategies. Nunchi developed nHYPE specifically as a solution to this coordination problem presented by the mandatory HIP-3 HYPE bond.

The deal unlocks liquidity and composability 

nHYPE aims to transform the HYPE bond from a capital burden into a community-owned asset by tokenizing the staked HYPE. This approach unlocks three critical properties:

1. Liquidity: Unlike HYPE, which is natively staked, nHYPE is a tradable ERC-20 token. Holders can use it to provide liquidity on a decentralized exchange (DEX), sell their position, or transfer the asset at any time without needing to initiate a seven-day unstaking process from the bond.
2. Productivity & Rewards: Holding nHYPE makes users eligible to earn cHIPs, Nunchi’s native points system, which is planned to have future utility within the Nunchi ecosystem. Holders will also earn native yields and partner rewards through weekly snapshots.
3. Composability: As a standard ERC-20 asset, nHYPE is intended to be a new DeFi primitive. It is designed for integration into other protocols, such as using it as collateral in money markets or plugging into protocols like Pendle.

The cHIPS game and native rewards 

The reward distribution for nHYPE holders is structured as a points system called “The cHIPs™ Game,” which will feature multipliers to incentivize early participation. The overall goal of this mechanism is to collectively secure the HIP-3 bond to activate the Yield Exchange, the first dedicated on-chain exchange for yield derivatives.

With this launch, Nunchi has reminded community members that the unstaking period for natively staked HYPE is seven days, requiring them to move their tokens to a spot wallet soon to be prepared for the nHYPE launch and the beginning of the cHIPs™ Game. The protocol has indicated that early stakers will receive additional rewards for their commitment.

Also Read: Hyperliquid Introduces HIP-3 Growth Mode With Lower Fees

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