Sky, the crypto protocol formerly known as Maker, has joined an intense bidding war to launch Hyperliquid's native USDH stablecoin.

The competition involves five major crypto companies fighting for control of what could become a multi-billion dollar revenue stream.

Sky co-founder Rune Christensen announced his company’s proposal on Monday, promising benefits that “no other stablecoin project can offer.” Sky manages $12.5 billion worth of stablecoins through its USDS and DAI tokens, making it one of the largest stablecoin operators in crypto.

High-Stakes Competition With Major Players

The bidding war started when Hyperliquid announced it would launch its own stablecoin to reduce dependence on external providers like Circle’s USDC. Currently, USDC makes up 95% of the $5.6 billion in stablecoins on Hyperliquid’s platform.

Four other companies have submitted proposals before Sky’s entry:

• Paxos Labs offered to use 95% of USDH earnings for HYPE token buybacks

• Frax Finance proposed backing USDH with its existing frxUSD stablecoin

• Agora promised 100% revenue sharing for HYPE buybacks

• Native Markets pitched a new venture specifically created for this opportunity

The winner will be chosen through a validator vote scheduled for September 14, making this one of the most transparent stablecoin selection processes in crypto history.

Sky’s Competitive Advantages

Sky’s proposal stands out with several key features. The company offers Hyperliquid a 4.85% return on all USDH tokens, which Christensen says is “significantly above the T-Bill rate.” This yield would make USDH more attractive than traditional treasury investments.

The proposal includes cross-chain functionality using LayerZero protocol, allowing USDH to work across multiple blockchains. Users could convert between USDH and Sky’s USDS token, which offers 4.75% yield to holders.

Source: @RuneKek

Sky also promises regulatory flexibility. The stablecoin could be customized to comply with US laws like the GENIUS Act, which restricts yield payments on stablecoins. This adaptability could prove crucial as crypto regulations evolve.

Beyond technical features, Sky committed $25 million to “autonomously grow DeFi on Hyperliquid.” This investment would create exclusive tokens that could generate billions in value for the protocol.

Massive Economic Impact Expected

Industry analysts predict USDH could reshape Hyperliquid’s economics dramatically. Research suggests the stablecoin could capture 15% of current USDC liquidity, potentially diverting $5.5 billion from Circle’s control.

Currently, Circle quietly collects around $200 million yearly from interest on Hyperliquid’s stablecoin reserves. USDH would redirect this revenue back to the platform and its users instead of external companies.

The announcement already boosted HYPE token prices. The token reached a new all-time high of $51.92 on Monday as investors anticipated the validator vote results.

Transparent Governance Process

Hyperliquid’s selection method emphasizes community control over corporate decisions. Validators must declare their preferred choice by September 11, giving users time to “stake to a validator who matches their vote.”

The Foundation’s validators will abstain from voting, aligning with whichever team gets majority support from independent validators. This approach reduces concerns about centralized influence while maintaining stake-based decision making.

Jaehyun Ha from trading firm Presto called this “consciously positioning itself in opposition to the centralized control characteristic of many exchanges.” The process elevates community oversight as a core strategy.

Some existing stablecoin teams on Hyperliquid have raised concerns about reopening the USDH ticker. They argue this disadvantages protocols that launched earlier using different names because the ticker was unavailable.

Platform Shows Strong Fundamentals

Hyperliquid has demonstrated impressive growth metrics supporting the stablecoin launch. The platform handled $378 billion in trading volume over the past month, making it the largest decentralized perpetual futures exchange.

Total Value Locked recently hit an all-time high of $5.55 billion, showing strong user adoption. The platform generated $106 million in revenue over 30 days, surpassing both Solana and Ethereum combined during the same period.

These fundamentals provide a solid foundation for USDH adoption. Strong trading volume and user engagement suggest the stablecoin could quickly gain traction once launched.

What This Means for Crypto

The validator vote on September 14 will determine more than just USDH’s issuer. The decision could influence how other platforms approach stablecoin governance and revenue sharing.

If successful, USDH might inspire other exchanges to launch native stablecoins rather than depending on external providers. This trend could redistribute billions in stablecoin revenue from companies like Circle back to DeFi protocols and their users.

The competition also highlights the growing importance of stablecoins in crypto economics. Control over stablecoin infrastructure increasingly means control over payment rails and yield generation in digital finance.