In an unprecedented move, Ethena Labs has officially withdrawn from the fiercely competitive race to issue Hyperliquid’s USDH stablecoin. This decision is set to shake up the cryptocurrency space, particularly the governance realm of Hyperliquid, where leading crypto projects are vying for control of the blockchain’s first major governance decision.
The Background: The USDH Stablecoin Race
Hyperliquid’s USDH stablecoin represents the future of native digital dollars, with teams like Ethena Labs, Native Markets, Paxos, and Frax Finance in the race. The prize? Governing a secure, reliable, and scalable stablecoin built on Hyperliquid. While the goal is ambitious, the competition has been fierce, and Ethena’s withdrawal has created waves across the cryptocurrency community.
Ethena Labs, led by founder Guy Young, initially presented a strong proposition, leveraging Anchorage’s USDtb token, backed by BlackRock’s $2B BUIDL fund. Their plan also pledged to reinvest 95% of reserve revenues into Hyperliquid through validator rewards, buybacks, or community funds. However, after listening to feedback from validators and community members, Ethena decided to step down and redirect its focus.
Why Ethena Withdrew
In a recent statement shared on X (formerly Twitter), Guy Young highlighted the importance of fairness and the overall feedback received from stakeholders. While Ethena was among the front-runners, their exit allows validators and the community to fully support another proposal they believe in. Young congratulated Native Markets, emphasizing that “Hyperliquid is built on a level playing field that allows new entrants to shine.”
Critics and some industry veterans, however, have questioned the fairness of the USDH proposal process. Haseeb Qureshi, managing partner at Dragonfly Capital, suggested the process was designed to favor Native Markets, as their proposal was released immediately after the USDH RFP was announced.
Who Leads Now?
With Ethena Labs out of the picture, Native Markets emerges as the clear leader in the USDH campaign. Their proposal, which seeks to integrate Stripe’s Bridge for infrastructure along with yield-sharing via HYPE token buybacks, has received significant community backing. Polymarket predictions currently give Native Markets a 90% chance of clinching the USDH bid.
The final governance vote, scheduled for Sunday between 10:00–11:00 UTC, will set the tone for Hyperliquid’s future and the unfolding narrative of decentralized finance (DeFi) governance.
The Road Ahead for Ethena
Despite stepping back from USDH, Ethena Labs is far from slowing down. The team has set its sights on innovating through hUSDe, savings solutions, hedging instruments, and the development of HIP-3 markets, all part of their broader mission to push the crypto ecosystem forward.
Ethena’s commitment to creating cutting-edge, community-driven financial tools underscores its long-term strategy. Their move to recalibrate their focus showcases their dedication to delivering impactful DeFi products.
Enhance Your Crypto Journey
Looking to stay ahead in the fast-paced crypto world? Products like Ledger Nano X offer secure storage for your digital assets. Ensure your cryptocurrencies stay safe while you explore the possibilities of blockchain innovation.
Conclusion
While Ethena Labs’ decision to exit the Hyperliquid race may seem like a setback, it reflects their commitment to community values and long-term growth. Meanwhile, as the governance vote for USDH nears, all eyes are on Native Markets and the future of Hyperliquid’s growing ecosystem.
