On Sept. 11, Ethena founder Guy Young announced on X that the decision to withdraw came after direct discussions with validators and delegates who questioned Ethena’s focus and alignment with the Hyperliquid (HYPE) ecosystem.
Community Feedback Drives Withdrawal
In his statement, Young outlined three main concerns raised by the Hyperliquid community: Ethena’s lack of native integration with the exchange, its broader ambitions beyond USDH, and perceptions that its growth strategy did not fully align with Hyperliquid’s vision.
“Congratulations to the Native Markets team. You deserve this,” Young wrote, acknowledging the rival proposal that had gained strong support. He also noted that Hyperliquid’s governance process highlighted how smaller, community-driven projects could thrive regardless of experience or financial backing.
Ethena’s initial proposal aimed to issue USDH via Anchorage Digital Bank’s upcoming USDtb token, indirectly backed by BlackRock’s $2 billion BUIDL fund. The plan, supported by BlackRock’s head of digital assets Robert Mitchnick and Anchorage CEO Nathan McCauley, was pitched as a scalable solution with institutional-grade credibility.
The team also committed to directing 95% of USDH reserve revenues to Hyperliquid through community funds, token buybacks, or validator rewards. Despite these assurances, validators ultimately opposed Ethena’s bid, citing concerns over centralization and its external focus.
Pivot to Native Product Development
Even after exiting the USDH race, Ethena affirmed its commitment to building within the Hyperliquid ecosystem. Young highlighted upcoming initiatives, including Hyperliquid-native synthetic dollars, USDe-enabled savings and spending tools, and new derivatives like equities-based perpetual swaps.
The team also plans to leverage its $13 billion Ethena USDe balance sheet to provide liquidity and expand Hyperliquid’s HIP-3 markets, introducing innovations such as modular prime broking and reward-bearing collateral.
“Our ambitions extend beyond working with just one partner exchange,” Young said, emphasizing Ethena’s continued role in Hyperliquid despite the setback.
The outcome signals a shift in Hyperliquid’s approach, favoring local builders through community governance over external entrants. With Native Markets now poised to control USDH’s future, the exchange’s stablecoin strategy could significantly influence its risk profile and long-term growth trajectory.
