Introduction to Ethena’s Proposal
Ethena has formally proposed to manage USDH, Hyperliquid’s planned native stablecoin. This move positions Ethena against rivals such as Sky, Frax, and Agora, among others. The proposal, submitted on September 9, outlines a comprehensive plan for the stablecoin’s structure and management.
Institutional Backing and Compliance
The stablecoin, USDH, would be backed by USDtb, a payment token to be issued by Anchorage Digital Bank on October 1. Additionally, it would be indirectly collateralized by BlackRock’s BUIDL fund. This structure combines institutional credibility with compliance and scalability. Ethena has already demonstrated its capabilities by minting and redeeming over $23 billion of tokenized dollar assets without downtime.
Anchoring USDH to Institutional Partners
Under the proposed plan, USDH would launch fully backed by USDtb. Ethena notes that USDtb is the only stablecoin BlackRock has approved for collateralization in BUIDL. Anchorage, the first OCC-chartered crypto bank in the U.S., would serve as the issuer and custodian. This partnership is expected to provide Hyperliquid with a sovereign stablecoin that helps the ecosystem grow.
Public Support and Incentives
Ethena has secured public support from partners, including Robert Mitchnick, head of digital assets at BlackRock, and Anchorage CEO Nathan McCauley. To align incentives, Ethena has pledged to direct at least 95% of net revenues from USDH reserves back to the Hyperliquid community. This includes contributions to the Assistance Fund and Hyperliquid token buybacks, with the option of distributing yield directly to staked validators in a later governance vote.
Security and Ecosystem Growth
Ethena’s proposal places strong emphasis on security, citing concerns that a mismanaged stablecoin could pose systemic risks to Hyperliquid’s markets. To mitigate this, the team has suggested governance by an elected guardian network of validators, potentially including LayerZero (ZRO). This network would have the authority to freeze or reissue tokens during crises. Furthermore, Ethena has pledged to invest at least $75 million in incentives to grow Hyperliquid’s HIP-3 front-ends and support new products.
Investment and Liquidity
The firm has stated that its existing $13 billion USDe balance sheet could be deployed to stabilize liquidity across Hyperliquid’s markets. This reinforces Ethena’s claim of being the most capable partner to scale USDH to a multi-billion supply. With over $5 billion in USD Coin (USDC) currently circulating on Hyperliquid, the decision over who will issue USDH could shape the exchange’s risk profile for years to come.
Conclusion
Ethena presents its candidacy as both a safe and ambitious option for managing USDH. With its existing track record and proposed plan, Ethena is well-positioned to take on this role. As the crypto community continues to evolve, it will be interesting to see how this proposal unfolds and how it impacts the future of bitpulse.