Ethena exits the Hyperliquid stablecoin competition, is Native Markets confident of victory?

Within the Hyperliquid ecosystem, there has been intense competition surrounding the issuance rights of its native stablecoin USDH. Ethena Labs announced its withdrawal on September 11, which propelled its main competitor Native Markets into a clear lead. This move reflects the Hyperliquid community's preference for solutions that are deeply integrated with the ecosystem rather than external corporate partners. This multi-billion dollar competition will ultimately be decided through on-chain validators' voting.

Competitive Focus: Control of a $5.5 Billion Stablecoin

The stakes in this bidding are enormous. The Hyperliquid platform currently holds $5.5 billion in USDC deposits, accounting for about 7.5% of the total USDC circulation. The platform has become a giant in the crypto trading space, handling nearly 80% of decentralized perpetual futures trading. Its trading volume in August was close to $400 billion, generating $106 million in revenue.

The winners of the USDH bidding are expected to capture up to $220 million in treasury bond yields that currently flow to external stablecoin issuers like Circle. This income will benefit the Hyperliquid ecosystem and HYPE token holders through a repurchase plan.

Why Did Ethena Exit? Community First Consideration

Ethena Labs was once one of the strongest competitors in this race. Despite its generous proposal, promising to use the USDtb token supported by BlackRock's BUIDL fund as the full collateral for USDH and returning 95% of the reserve income to the Hyperliquid community, it ultimately chose to withdraw.

Guy Young, the founder of Ethena, stated that this decision is based on community feedback. Validators raised three main concerns:

1. Non-native: Ethena is not the native team of the Hyperliquid ecosystem, its business spans multiple blockchains.
2. Conflict of Interest: Ethena operates multiple different products, which may lead to a conflict of priorities with USDH.
3. Overambitious: Ethena's grand business goals exceed the scope of a single exchange partnership.

The exit of Ethena highlights that the preferences and values of the community are always placed first in decentralized governance systems, after all, this is the soil on which the project relies for its survival.

Native Markets Become the Leader

With Ethena's exit, Native Markets has become the most notable winner. The team had already garnered 30.8% of validator support before Ethena's exit, outpacing other competitors.

The proposal for Native Markets is fully focused on the Hyperliquid ecosystem and plans to use Stripe's Bridge infrastructure to issue USDH. Its core strategy is to use 50% of reserve earnings for HYPE token buybacks and the other 50% for ecosystem growth. This commitment, which is highly aligned with the ecosystem, has won the favor of validators.

Competition is still ongoing

Although Native Markets is in a leading position, the competition is not over. Paxos Labs has also gained 7.6% support from validators with its commitment to integration with PayPal and Venmo. In addition, well-known projects such as Frax Finance, Agora, and Sky (formerly MakerDAO) are also participating in the bidding. According to the predictions of the betting market, the winning rate of Native Markets is approximately 65%.

The final decision will be made on September 14 through voting by on-chain validators. This transparent governance process allows HYPE token holders to delegate their votes to validators that align with their preferences.

Conclusion

The exit of Ethena proves that in a decentralized world, community culture and values can transcend enormous economic interests and become the decisive factor in decision-making. Regardless of the final voting result, this intense bidding war has set a new standard for the crypto industry, showcasing the power of the community in major protocol decisions. Who will ultimately hold the issuance rights of the Hyperliquid native stablecoin USDH? Let's wait and see.