Hyperliquid’s USDH Stablecoin Governance Battle Intensifies as Native Markets Emerges as Frontrunner

The decentralized exchange Hyperliquid has ignited a fierce competition among stablecoin issuers with its decision to launch USDH, a native stablecoin to replace its current reliance on Circle's USDC. At least eight entities, including industry heavyweights like Paxos and Ethena, have submitted proposals for the right to issue the token—a privilege that could unlock billions in value.

Native Markets, a newcomer formed specifically for this opportunity, has surged ahead as the odds-on favorite. Polymarket traders initially assigned the Max Fiege-led venture a 90% chance of securing validator approval, though those odds have since moderated to 84%. The firm's hybrid reserve model, combining off-chain assets with algorithmic mechanisms, appears to resonate with speculators who've driven Polymarket trading volumes past $1 million.

The ultimate decision rests with Hyperliquid's validators, but the market's early verdict reflects the high-stakes nature of stablecoin issuance rights in DeFi's evolving landscape. This governance battle underscores how protocol-native stablecoins are becoming strategic chess pieces in the competition for liquidity and user adoption.