Introduction to Hyperliquid’s Stablecoin Contest
The decentralized finance protocol formerly known as MakerDAO, now referred to as Sky, has announced its intention to issue Hyperliquid’s upcoming stablecoin, USDH. This move comes after Hyperliquid, a decentralized exchange, revealed that its community would vote on which issuer will manage USDH.
Background on Hyperliquid’s Stablecoin
Hyperliquid made the announcement on Sept. 5, sparking a competition among various entities to become the issuer of USDH. The list of contenders includes Paxos, Frax Finance, and Agora, with each presenting unique proposals to manage the stablecoin.
Sky’s Proposal for USDH
Rune Christensen, the founder of Sky, presented a detailed proposal on X, highlighting Sky’s experience and resources as the most suitable contender to shape the future of USDH. With over $8 billion in circulation across its USDS and Dai tokens and $13 billion in collateral backing them, Sky has established itself as a trusted name in DeFi.
Key Features of Sky’s Proposal
The proposal outlines several key features, including $2.2 billion in instant redemption liquidity through Sky’s Peg Stability Module, making it easy to swap into USD Coin (USDC) at scale. Additionally, the stablecoin would be natively multichain via LayerZero, extending Hyperliquid’s reach across blockchains. Sky also pledged a 4.85% yield on all USDH on Hyperliquid, with proceeds dedicated to buybacks of the HYPE token.
Ecosystem Growth and Risk Management
Sky’s proposal also includes a $25 million “Hyperliquid Star” fund to bootstrap new DeFi projects on the exchange and attract billions in total value locked. The plan emphasizes risk management, with frameworks modeled on Basel III banking standards, and highlights Sky’s S&P credit rating, currently graded at B-. The relocation of Sky’s buyback engine to Hyperliquid is also intended to boost liquidity and align the protocol more tightly with the exchange.
Competition and Validator Vote
Sky faces stiff competition from other contenders, including Paxos, Frax Finance, and Agora. Each entity has presented unique proposals, with Paxos promising compliance and integrations with popular payment apps, Frax Finance promising to give back all reserve revenue to the community, and Agora positioning itself as a neutral alliance of leading partners. A validator vote is scheduled to take place on Sept. 14, with proposals due by Sept. 10.
Conclusion
The competition for Hyperliquid’s stablecoin has intensified, with Sky’s entry significantly raising the bar. The proposal’s emphasis on deep liquidity, attractive returns, and a proven security track record may resonate strongly with validators. As the DeFi community awaits the outcome of the vote, one thing is certain - the future of USDH will be shaped by the chosen issuer, and the implications will be far-reaching for the Hyperliquid ecosystem and the broader DeFi landscape, with news and updates available on bitpulse.