Introduction to Hyperliquid’s Governance Vote

Decentralized exchange and Layer-1 chain Hyperliquid is set to conduct a governance vote, where protocol validators will decide which team will be assigned the USDH ticker to issue a native stablecoin on the network. The voting process is a significant step for the Hyperliquid ecosystem, allowing validators to have a say in the direction of the protocol.

Voting Process and Timeline

The Hyperliquid team confirmed that the voting will take place on September 14 between 10:00 and 11:00 UTC. Teams vying for the USDH designation must submit their proposals by September 10, with validators expected to publicly declare their preferred choice by September 11. This allows users to “stake to a validator who matches their vote.” Voting is based on stake, with validators voting by submitting the address corresponding to the team they support.

Clarification on Voting Outcomes

The team clarified that the vote is solely concerning the ticker assignment and does not grant the chosen issuer any exclusive rights or special privileges. There will continue to be multiple stablecoins on the Hyperliquid blockchain, and new stablecoin teams who join the Hyperliquid ecosystem. USDH will be only one of many such stablecoins, ensuring a diverse range of options for users.

The Significance of USDH

Hyperliquid announced its plans to launch a proprietary stablecoin on September 5, which will function as a “Hyperliquid-first, Hyperliquid-aligned, and compliant USD stablecoin.” USDH would serve as an alternative to bridged assets like USDC, which currently accounts for 95% of the $5.6 billion stablecoin supply on the network, according to DefiLama data.

Proposals for USDH

Issuers that are interested in deploying USDH have been asked to submit proposals, and the winning group will be chosen through an on-chain validator vote, with selection based on stake-weighted support from the network’s validators. As of September 8, four teams, Paxos Labs, Frax Finance, Agora, and a Hyperliquid-native group called Native Markets, have submitted proposals. Each bidder has outlined a different model for backing and distributing the upcoming stablecoin.

Proposal Details

Agora’s proposal outlines plans to channel net revenue from its cash and U.S. Treasury reserves into Hyperliquid’s Assistance Fund or dedicated HYPE token buybacks. This approach demonstrates the potential for USDH to contribute to the growth and development of the Hyperliquid ecosystem.

Market Reaction

Since the Friday announcement, HYPE (HYPE), the decentralized exchange’s native cryptocurrency, has rallied nearly 12%, and was trading at just 2.3% below its all-time high of $50.99 at press time. This surge in price reflects the excitement and anticipation surrounding the launch of USDH and the potential for Hyperliquid to further establish itself as a leading decentralized exchange.

Hyperliquid’s Growing Role

Besides the stablecoin plans, much of this performance has been supported by the platform’s growing role as a top DEX, particularly for perpetual futures trading. DefiLama data for last month shows that the platform handled $398 billion in perpetual derivatives trading volume and $20 billion in spot trades. Hyperliquid has also emerged as the eighth-largest decentralized finance protocol in terms of total value locked, solidifying its position in the DeFi landscape.

Conclusion

The upcoming governance vote on Hyperliquid marks an important milestone for the protocol, as it prepares to launch its native stablecoin, USDH. With multiple teams vying for the USDH designation, the outcome of the vote will be closely watched by the community. As Hyperliquid continues to grow and evolve, it is likely to remain a major player in the DeFi space, with its native cryptocurrency, HYPE, potentially benefiting from the protocol’s expanding ecosystem, as seen on platforms like bitpulse.