The timeline is unusually compressed for such a consequential choice, and with details still emerging as bidders finalize proposals, we’ve compiled an overview of events, upcoming milestones, and the teams in the race.

TL;DR

• Hyperliquid upgrade: Announced (5 sep) fee cuts, permissionless spot listings, and a governance-driven process to launch USDH, a native dollar-pegged stablecoin.
• Why it matters: USDH would shift $150–200m of annual yield from Circle’s USDC back into HYPE buybacks, validator rewards, and HL’s ecosystem.
• The five-horse race: Native Markets, Paxos, Frax, Agora, and Sky have all submitted bids to run USDH. The proposal deadline is tomorrow and validators will vote on Sep 14 to choose the “winner”.

Hyperliquid’s new upgrade

Last Friday, September 5, 2025, Hyperliquid announced a network upgrade on its discord. The announcement included three important parts:

• 80% reduction in taker fees and adjusted maker rebates for spot trading pairs to enhance liquidity.
• Allowing anyone to list spot quote assets, starting on testnet, with validator staking and slashing for network security.
• The announcement of a competitive process for USDH, a native dollar-pegged stablecoin, inviting teams to submit detailed deployment plans.

These USDH proposals will be evaluated by the 18 active validators (ex-HYPE foundation) in an on-chain vote on 14 September and validators need to indicate support as early as tomorrow, 10 sept at 10:00 UTC.

This governance-led process ensures the new stablecoin is chosen by the community rather than imposed from above, aligning USDH with Hyperliquid’s users and giving them direct influence over how reserves and yield are managed.

Below is an overview of how the timeline looks like and some wide estimations of when we could see USDH launch.

Why? The circle dilemma

Until now, Hyperliquid’s growth has been tied closely to USDC. Roughly 95% of assets on the platform are denominated in USDC, amounting to nearly $5 billion in deposits. That’s currently 7.61% of USDC’s entire supply, effectively making Hyperliquid one of Circle’s largest clients.

This concentration brings two major issues:

• Centralization risk: USDC is “freezeable” at Circle’s discretion, which conflicts with Hyperliquid’s permissionless ethos.
• Externalized yield: Circle pockets nearly all revenue from investing USDC reserves in Treasuries and money market funds. In 2024, over 99% of Circle’s $1.68 billion revenue came from this interest spread.

For Hyperliquid, that means billions in user deposits generate yield for Circle, not for its own community. Internal estimates suggest $150–200 million of annual revenue could be redirected to HYPE buybacks, validator rewards, and liquidity programs if those reserves were instead denominated in USDH.

The timing. Circle had plans to expand USDC and its cross-chain transfer protocol (CCTP) onto Hyperliquid, but delays created an opening. Now, Hyperliquid has seized that gap with USDH, turning the question from whether it should launch a native stablecoin to which team should issue it.

The governance experiment. Rather than mint USDH itself, Hyperliquid is treating stablecoin issuance as a competitive procurement process. Teams must bid publicly, disclosing reserve models, compliance frameworks, yield-sharing mechanisms, and infrastructure. Validators,  the top stakers of HYPE,  act as the selection committee, casting on-chain votes that determine who controls billions in deposits.

This transforms what is typically a black-box arrangement in TradFi into a transparent, community-owned negotiation.

The five–horse race

Five issuers have stepped forward to compete for the mandate to deploy USDH. Their proposals differ on reserves, compliance posture, infrastructure, and how much yield they promise to redirect back to Hyperliquid’s ecosystem. The submission window for bids closes tomorrow, after which the 18 active validators are expected to share their initial views making it likely that these five teams represent the real contenders in the race.

Also track:

• Polymarket odds
• Voting of eligible validators starting 14 September

Conclusion

Hyperliquid’s USDH initiative represents more than just a stablecoin launch. It’s a strategic pivot from dependency on external issuers to owning the most critical layer of its financial stack. By forcing bidders into a public competition, Hyperliquid is importing procurement practices into DeFi governance, with validators empowered to decide not only who issues USDH but also how billions in yield will be shared.

For Circle, the implications are meaningful: losing its dominant position on Hyperliquid could mean a revenue hit of up to 10% of its business. 

For DeFi, USDH offers a preview of how governance can move beyond fee switches and token votes into structured negotiations over real economic flows.

The validator vote on September 14 will determine which of the five contenders earns the mandate and, in the process, whether Hyperliquid can set a new precedent for how decentralized platforms control the stablecoin rails of their ecosystems.