The Inside Story: Why Ethena Labs Pulled Out of Hyperliquid’s USDH Proposal

Ethena Labs just dropped a bombshell—withdrawing support from Hyperliquid's USDH stablecoin proposal. The move sent shockwaves through DeFi circles, raising eyebrows about the future of algorithmic stablecoins.

Behind the Scenes: Risk vs Reward

Sources close to the decision point to mounting regulatory pressure and concerns about scalability. Ethena's team reportedly questioned whether USDH could maintain its peg during extreme market volatility—something that's become all too common in crypto's casino-like environment.

Timing is Everything

The withdrawal comes just as global regulators are cracking down on stablecoin projects. Ethena's move might be preemptive—getting ahead of potential compliance headaches before they become full-blown migraines.

Market Impact: Ripples, Not Waves

While Hyperliquid's token took a temporary hit, the broader market barely blinked. Another day, another DeFi drama—though it does make you wonder if anyone actually reads those 50-page proposals before investing.

Looking Ahead: Strategic Retreat or Permanent Exit?

Ethena isn't talking about future collaborations, but in crypto, today's competitor is tomorrow's merger target. The only constant? That 20% of projects will fail spectacularly while VCs cash out—because in traditional finance, they'd call this gambling, but here we call it innovation.