Hyperliquid, the fast-rising decentralized derivatives exchange (DEX), is once again in the spotlight. After dominating the perpetual futures market, the platform has now launched its own native stablecoin called USDH.

This isn’t just about adding another token, it has sparked a competitive race among major players like Paxos and Frax Finance to become its official issuer.

USDH and Hyperliquid’s Big Potential

Hyperliquid opened a community vote to decide who would become the official issuer of USDH. The stakes are high: there are around $5.6 billion in USDC deposits currently locked within the Hyperliquid ecosystem.

If those funds are migrated to USDH, the potential yield could surpass $220 million annually, a figure that immediately caught the attention of stablecoin issuers eager to secure the role.

Frax Offers Eye-Catching Returns

Among the candidates, Frax Finance made headlines by offering a 100% yield proposal. This bold move sparked heated debate within the community over whether such a model is realistic or sustainable.

However, the voting process itself drew criticism. Some community members raised concerns over fairness in the governance mechanism, questioning whether the system truly reflected the best choice for USDH’s future issuer.

Goal: Liquidity and New Revenue Streams

With USDH, Hyperliquid aims to strengthen internal liquidity while also creating new revenue sources from stablecoin yields and interest.

But a key question remains: can USDH truly replace USDC as the dominant stablecoin in Hyperliquid’s ecosystem? Given USDC’s established market presence, the transition will be anything but easy.

Conclusion

Hyperliquid’s launch of USDH marks a new chapter in the stablecoin wars. If successful, it won’t just boost the platform’s liquidity but also prove that DEXs can rival centralized exchanges (CEXs) in financial innovation.