Competition Arises as Sky Vies for Hyperliquid's $5.5 Billion Stablecoin Deal Contract
In a significant development for the crypto industry, Hyperliquid, the popular decentralised finance (DeFi) platform, has announced an election to decide the issuer of its upcoming stablecoin, USDH. The election day could have far-reaching implications, influencing how other platforms approach stablecoin governance and revenue sharing.
The competition involves five major crypto companies, including Sky, fighting for control of a potential multi-billion dollar revenue stream. Sky, a stablecoin operator managing $12.5 billion worth of stablecoins through its USDS and DAI tokens, has submitted a proposal for the USDH issuance.
Hyperliquid's selection process emphasises community control over corporate decisions. Users can stake to a validator who matches their vote, ensuring a democratic process. The Foundation's validators will abstain from voting, aligning with the majority choice of independent validators.
Sky's proposal offers Hyperliquid a 4.85% return on all USDH tokens, significantly above the T-Bill rate. The company Ethena, supported by BlackRock, has also submitted a proposal, promising a high yield of 4.85% by returning 95% of net revenues from USDH reserves to the Hyperliquid ecosystem.
Industry analysts predict that USDH could capture 15% of current USDC liquidity, potentially diverting $5.5 billion from Circle's control. Currently, USDC makes up 95% of the $5.6 billion in stablecoins on Hyperliquid's platform.
The HYPE token, native to Hyperliquid, reached a new all-time high of $51.92 following the announcement. The platform has demonstrated strong growth metrics, handling $378 billion in trading volume over the past month, surpassing both Solana and Ethereum combined during the same period.
Hyperliquid's validator election for the USDH issuer is scheduled for September 14. The election day could influence how other platforms approach stablecoin governance and revenue sharing, setting a precedent for the industry.
Sky's proposal includes cross-chain functionality using the LayerZero protocol, allowing USDH to work across multiple blockchains. Sky has also committed $25 million to 'autonomously grow DeFi on Hyperliquid,' potentially creating exclusive tokens that could generate billions in value for the protocol.
Four other companies have submitted proposals before Sky's entry: Paxos Labs, Frax Finance, Agora, and Native Markets. The validator election could be a close call, with each company offering unique advantages and incentives for Hyperliquid.
The outcome of the election day could shape the future of DeFi on Hyperliquid and potentially redefine the stablecoin landscape. The validator election could also influence how other platforms approach stablecoin governance and revenue sharing, making it a pivotal moment in the crypto industry.
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