Sky — previously recognized as MakerDAO — has put forward a bold proposal to underpin USDH, leveraging its robust $8 billion balance sheet, an extensive seven-year operational track record, and a pioneering B- credit rating from S&P, marking the very first of its kind awarded to a decentralized finance (DeFi) protocol.
USDH Fueled by Sky’s Strength
The ideal stablecoin transcends mere price stability. It should, rather, generate efficient and attractive yields by actively nurturing and expanding the ecosystem it inhabits. By entrusting Sky with powering USDH, the ecosystem taps into a hyperliquid environment that fosters growth and innovation.
Hyperliquid’s Role in the USDH Launch
Last month alone, Hyperliquid facilitated close to $400 billion in trade volume, positioning itself as a heavyweight in the DeFi space. The platform has opened the gates for issuers to vie for the privilege to deploy USDH within its infrastructure.
With $5.5 billion stashed in USDC deposits—which represents about 7.5% of the entire USDC supply—Hyperliquid’s contract emerges as one of DeFi’s most rewarding opportunities. Validators are slated to cast their votes on September 14, notably with the Hyperliquid Foundation opting out of voting.
Sky’s Proposal: Unmatched Incentives and Stability
- 4.85% Yield: All USDH tokens held on Hyperliquid earn a generous rate exceeding typical Treasury bill returns, funded by revenue streams dedicated to HYPE token buybacks and an Assistance Fund.
- $2.2 Billion Liquidity: Instant redemption backed by a Peg Stability Module gives institutional players the confidence to trade freely at scale.
- Ecosystem Investment: A $25 million “Hyperliquid Genesis Star” initiative, inspired by Sky’s Spark token farm—which has amassed more than $1 billion in Total Value Locked (TVL)—aims to ignite DeFi growth on Hyperliquid.
- Buyback Engine Migration: Sky intends to relocate its native buyback infrastructure, generating upwards of $250 million in annual profits, to the Hyperliquid platform.
Embedded in Sky’s vision is a multi-faceted approach blending yield, liquidity, and ecosystem-building, setting it apart from the competition.
Competitive Landscape: Diverse Strategies from Rival Bidders
Other contenders have shaped their USDH deployment proposals with distinct philosophies:
- Paxos: Committed 95% of reserve earnings to HYPE buybacks, paired with a fee-free migration path for USDC holders.
- Frax: Advocates a “community-first” wrapper model, channeling 100% of Treasury-generated yield directly to users.
- Agora: Supported by State Street, VanEck, and MoonPay, vows to funnel all net revenues into HYPE buybacks while emphasizing a neutral stance.
- Native Markets: Partnered with Stripe’s Bridge, but grappling with community concerns over possible conflicts stemming from Stripe’s Tempo blockchain and its ownership of wallet provider Privy.
Validators Poised for a Decision Amid Intense Competition
With Ethena reportedly preparing its own candidacy, the upcoming vote promises a crowded and complex field. The choices before the validators won’t just shape USDH’s architecture—balancing Genius-compliance, user-centric yield, and Hyperliquid-native characteristics—but will also define whether Hyperliquid’s monetary foundation integrates a traditional stablecoin titan, a DeFi-born innovator, or a blockchain-aspiring corporate payments heavyweight.
