Ethena Labs Withdraws from Hyperliquid’s USDH Stablecoin Bid Amid Ecosystem Concerns

Ethena Labs just pulled the plug on Hyperliquid's USDH stablecoin partnership—citing 'ecosystem concerns' as the deal-breaker. Another day, another DeFi project hitting roadblocks before it even gets off the ground.

Why the Cold Feet?

Rumors are swirling that Ethena’s sudden exit stems from deeper structural worries within Hyperliquid’s ecosystem. No hard numbers were disclosed, but insiders hint at unresolved protocol risks and liquidity questions that didn’t sit right with Ethena’s long-term playbook.

Stablecoin Drama—Nothing New Here

Let’s be real: the stablecoin space is a minefield of half-baked promises and regulatory side-eye. Another day, another 'game-changing' stablecoin hitting a snag—surprise, surprise. Maybe next time someone will actually read the fine print before jumping in.

So What’s Next?

Hyperliquid’s now back to square one, hunting for a stablecoin partner that’s willing to ignore the red flags Ethena couldn’t. Meanwhile, Ethena’s walking away clean—proving once again that in crypto, sometimes the smartest move is knowing when not to make one.

Native Market gains momentum

Ethena’s withdrawal clears the field for Native Markets, which Young publicly congratulated. Notably, CryptoSlate previously reported that the Native Market team was a clear favorite among the competing teams.

Young addressed critics who had questioned Native’s credibility, arguing that their success reflected Hyperliquid’s community-driven ethos.

According to him:

“No one gives a f#ck how big you are, your background, pedigree or financial resources. It is a level playing field where emergent players can win the hearts of the community and are given a fair shot at succeeding.”

Broader plans

Although Ethena’s USDH bid is off the table, Young stressed that the project’s broader plans on Hyperliquid remain unchanged.

He outlined plans to prioritize products such as synthetic dollars (hUSDe), USDe-powered savings and card products, and hedging flows designed for Hyperliquid markets.

Ethena also intends to explore HIP-3 markets, including reward-bearing collateral, modular prime broking, and perpetual equity swaps.

According to Young, these initiatives represent Ethena’s long-term strategy of doubling down on innovation.

He wrote:

“We will do what we have always done since day one: outcompete everyone else on product regardless.”