Sky Joins Race to Issue Hyperliquid USDH Stablecoin with $8B Backing and 4.85% Yield

September 9, 2025

Sky, formerly MakerDAO, has entered the competition to issue Hyperliquid’s native stablecoin, USDH, joining rivals Paxos, Frax, Agora, and Native Markets. The protocol is leveraging its $8 billion balance sheet, seven-year operating history, and a B- S&P credit rating—the first-ever granted to a DeFi protocol—to strengthen its bid.

Hyperliquid, which processed nearly $400 billion in trading volume last month, invited issuers to compete for the lucrative USDH contract. The exchange holds $5.5 billion in USDC deposits, roughly 7.5% of that stablecoin’s supply. Validators will vote on September 14, with the Hyperliquid Foundation abstaining.

Sky’s proposal emphasizes yield, liquidity, and ecosystem growth:

• Yield: 4.85% returns on all USDH held on Hyperliquid, surpassing Treasury rates, with revenue allocated to HYPE buybacks and the Assistance Fund.
• Liquidity: $2.2 billion in instant redemption via its Peg Stability Module, giving institutional traders confidence for large-scale operations.
• Ecosystem Support: A $25 million “Hyperliquid Genesis Star” to bootstrap DeFi adoption on Hyperliquid, plus migration of Sky’s native buyback engine generating $250 million annually.

Other competitors offer distinct strategies:

• Paxos: 95% of reserve earnings for HYPE buybacks with zero-fee USDC migration.
• Frax: Community-first wrapper, directing 100% of Treasury yield to users.
• Agora: Backed by State Street, VanEck, and MoonPay, pledges all net revenue to buybacks while emphasizing neutrality.
• Native Markets: Tied to Stripe’s Bridge, facing scrutiny over conflicts with wallet provider Privy.

With Ethena hinting at a bid, validators face a crowded field. The outcome will define not only USDH’s yield and compliance but also whether Hyperliquid’s monetary layer is anchored to DeFi, a legacy stablecoin, or a corporate blockchain player.

About The Author

ctleditor

See author's posts