Sky Makes Bold Bid to Issue Hyperliquid’s USDH Stablecoin - DeFi’s Next Game Changer?

Sky just dropped a bombshell in the stablecoin arena—launching a strategic bid to issue Hyperliquid's USDH. This isn't just another stablecoin play; it's a power move that could reshape decentralized finance.

Why This Matters

Hyperliquid's USDH isn't your grandma's stablecoin. Built for speed and scalability, it targets the gaps left by legacy players. Sky's backing signals serious institutional interest—something DeFi desperately needs to shake off its cowboy reputation.

The Real Story

Traditional finance might scoff, but they're missing the point. Stablecoins aren't just digital dollars; they're the lifeblood of crypto's economy. Sky's push into USDH isn't altruism—it's a calculated bet on the future of money. And let's be real, if banks won't innovate, someone else will.

Bottom Line: Sky's USDH bid could be the catalyst that finally forces traditional finance to pay attention—or get left behind. Because nothing says 'disruption' like a well-timed stablecoin launch while Wall Street still figures out blockchain basics.

Hyperliquid’s stablecoin contest intensifies

Hyperliquid (HYPE), a decentralized exchange, announced on Sept. 5 that its community WOULD vote on which issuer will manage USDH, its native stablecoin. The competition has already drawn offers from entities such as Paxos, Frax Finance (FRAX), and Agora.

A validator vote will take place on Sept. 14, with proposals due by Sept. 10. The high-stakes process has driven Hyperliquid’s HYPE token to an all-time high of $51.92.

Sky’s entry significantly raises the bar. With more than $8 billion in circulation across its USDS and Dai (DAI) tokens and $13 billion in collateral backing them, the protocol has established itself as one of the most trusted names in DeFi.

Sky’s proposal for USDH

According to Christensen, the partnership would equip USDH with $2.2 billion in instant redemption liquidity through Sky’s Peg Stability Module, making it easy to swap into USD Coin (USDC) at scale. The stablecoin would be natively multichain via LayerZero (ZRO), extending Hyperliquid’s reach across blockchains.

Perhaps most strikingly, Sky pledged that all USDH on Hyperliquid would generate a 4.85% yield, higher than U.S. Treasury bills, with the proceeds dedicated to buybacks of the HYPE token.

USDH powered by Sky

The best stablecoin offers so much more than just a stable medium of exchange – it should also deliver highly efficient returns, generated by actively developing, building and growing the ecosystem it lives in.

By using Sky to power USDH, the Hyperliquid…

Beyond immediate liquidity and returns, Sky promised ecosystem growth through a $25 million “Hyperliquid Star,” a fund designed to bootstrap new DeFi projects on the exchange and attract billions in total value locked. 

Risk management was also a centerpiece of the proposal, with Christensen highlighting frameworks modeled on Basel III banking standards and pointing out that Sky is the only stablecoin issuer with an S&P credit rating, currently graded at B-.

The plan also calls for Sky to relocate its buyback engine, responsible for $250 million in annual profits, to Hyperliquid, a MOVE intended to boost liquidity and align the protocol more tightly with the exchange. Christensen stressed that USDH would inherit the same design as DAI and USDS, ensuring transparency and reliability from the start.

A competitive race ahead

Sky is facing stiff competition, with Paxos promising compliance and integrations with popular payment apps, FRAX Finance promising to give back all reserve revenue to the community, and Agora positioning itself as a neutral alliance of leading partners.

Still, its offer of DEEP liquidity, attractive returns, and a proven security track record could resonate strongly with validators.