In a significant move for decentralized finance, Native Markets has emerged victorious in the competition to develop Hyperliquid’s native stablecoin, USDH. Announced on September 14, this selection reflects a strategic pivot towards speed and innovative alignment within the DeFi community, as opposed to opting for familiar yet established issuers.
The decision was made during a community vote, where Native Markets triumphed over recognized firms such as Paxos, BitGo, Ethena, and Frax. Garnering two-thirds of the staked HYPE token votes, Native Markets was deemed the best fit, having proposed a streamlined rollout of USDH—a plan that aims to integrate seamlessly with the Hyperliquid platform and promises to reinvest earnings back into the ecosystem.
Experts weighed in on the implications of the community’s choice. “Native Markets was favored for their rapid approach and innovative mindset that resonate with Hyperliquid’s goals,” commented Sid Sridhar, founder of Bima Labs. He remarked that disruption in the sector often stems from new entrants who are more agile than their incumbent counterparts, encouraging a competitive environment ripe for innovation.
Chandler De Kock, co-founder of Silhouette, reiterated this sentiment, highlighting Native Markets’ year-long endeavor to establish a stablecoin presence. He noted, “While established entities may have more substantial track records, for Native Markets, USDH represents a primary initiative rather than just another venture.” This alignment was critical in rallying validator support for the proposal.
The community’s inclination towards Native Markets also stems from the practical design of their stablecoin proposal, which integrates various components directly associated with Hyperliquid. Jonathan Morgan, a senior crypto analyst at Stocktwits, pointed out that the in-house structure of the project appeals to validators. He noted that the proposed 50/50 allocation of reserve yield—split between HYPE buybacks and ecosystem development—was a strategic factor in their decision-making process.
Nonetheless, the confidence in Native Markets is tempered by the inherent risks associated with trusting a newer issuer. Established players like Paxos bring years of experience and a robust compliance framework, serving as a benchmark for reliability in the stablecoin sphere. “Longstanding institutions have built a sturdy infrastructure capable of withstanding regulatory scrutiny and market fluctuations,” Sridhar highlighted, suggesting a necessary caution when transitioning to newer entities.
Potential risks remain concerning the operational mechanics of USDH. Morgan cautioned that the successful functioning of collateral, issuance systems, and liquidity hinges on the stability of their supporting infrastructure. Issues such as latency with platforms like Bridge or Superstate during high-demand periods could create transactional disruptions.
The process that led to the selection of Native Markets has stirred a degree of controversy, with some stakeholders expressing concerns about governance transparency and trust. Nic Puckrin, CEO of Coin Bureau, noted that speculations about a predetermined outcome could undermine confidence in the selection process. “If there are doubts about how the decision was made, it has the potential to erode trust and impact perceptions of USDH going forward,” he remarked.
As Hyperliquid prepares to enter the testing phase for USDH, the eyes of the DeFi community will be keenly focused on Native Markets. Their success or failure could serve as a critical case study on the viability of new entrants versus established players in the ever-evolving landscape of stablecoins.
