Ethena would divert USDH revenue back into Hyperliquid’s ecosystem.
Ethena Labs, makers of the synthetic-dollar protocol, cast its name into the USDH ring on Tuesday, presenting itself as a potential suitor for issuing Hyperliquid’s stablecoin.
The decentralized exchange and layer-1 network is currently being powered by Circle’s USDC and Tether’s USDT0, but Hyperliquid’s community is currently soliciting proposals on a “Hyperliquid-alinged” stablecoin that could serve as an alternative.
Proposals have already been penned by entities including stablecoin issuer Paxos and World Liberty Financial, the decentralized finance project backed by U.S. President Donald Trump, but Ethena’s proposal emphasizes that its support would also come with that of its partners.
Ethena flexed partnerships with Anchorage Digital, a federally chartered digital assets bank, and Securitize, the BlackRock-backed, real-world asset tokenization firm. Anchorage issues Ethena’s USDtb stablecoin, which is backed by BlackRock’s tokenized BUIDL fund.
“We are excited to enable Ethena’s USDtb, which is 100% backed by BUIDL and uniquely positioned to offer institutional grade cash management as well as on-chain liquidity to Hyperliquid users,” BlackRock Head of Digital Assets Robert Mitchnick said in the proposal.
Introduced in the first quarter of 2023, Hyperliquid was viewed as a scrappy DeFi Startup not too long ago. But now projects like Ethena are clamoring for its feedback, underscoring how that perception is changing. Hyperliquid has $5.7 billion in stablecoins on its network, for example, according to crypto data provider DefiLlama.
Under Ethena’s proposal, USDH would be initially backed by USDtb, and therefore have indirect backing from the $14 trillion asset manager’s BUIDL fund. With at least 95% of the revenue generated by USDH’s reserves, distributions would be made to Hyperliquid’s so-called Assistance Fund, alongside HYPE purchases and distributions to validators.
HYPE changed hands around $53 on Tuesday, a 20% increase over the past day, according to crypto data provider CoinGecko. The token serves as Hyperliquid’s governance token, letting holders participate in the process of voting on software upgrades and other initiatives.
If Ethena receives a green light, the project would cover transaction costs associated with making USDH the go-to stablecoin within Hyperliquid’s exchange, its proposal adds.
Among other notable benefits, the proposal states that Anchorage would issue Ethena’s USDtb stablecoin natively on Hyperliquid’s network. On top of that, Securitize would deploy its platform on the layer-1, bringing “institutional grade tokenized funds, stocks, and other financial products to the Hyperliquid ecosystem for no deployment cost.”
