Sky, the decentralized finance protocol formerly known as MakerDAO, has officially entered the race to issue Hyperliquid’s upcoming stablecoin USDH. The move sets up a high-stakes contest among some of the biggest names in crypto as Hyperliquid prepares to launch its native stablecoin.
Validators to Decide on September 14
Hyperliquid, a decentralized exchange, announced on September 5 that its community validators would vote on September 14 to determine which issuer will oversee USDH. The deadline for proposals was September 10, and competitors already in the running include Paxos, Frax Finance, and Agora.
The announcement has fueled excitement, with Hyperliquid’s HYPE token climbing to an all-time high of $51.92 as the race heats up.
Sky’s Proposal: Liquidity, Yield, and Growth
Unveiling the plan on September 9, Sky founder Rune Christensen positioned the protocol as the most experienced and well-resourced contender. Backed by more than $13 billion in collateral and with over $8 billion in circulation across its USDS and DAI stablecoins, Sky already has one of the strongest reputations in DeFi.
Key highlights of Sky’s proposal include:
- $2.2 billion in instant liquidity for USDH via Sky’s Peg Stability Module, enabling seamless swaps into USDC.
- Native multichain functionality through LayerZero, expanding USDH’s reach across blockchains.
- A guaranteed 4.85% yield on all USDH, surpassing U.S. Treasury bill returns, with profits funneled into buybacks of the HYPE token.
- A $25 million Hyperliquid Star growth fund to support new DeFi projects on the exchange and attract billions in TVL.
- Strong risk management frameworks modeled on Basel III banking standards, plus the distinction of being the only stablecoin issuer with an S&P credit rating (currently B-).
In addition, Sky pledged to move its buyback engine, which generates $250 million annually, over to Hyperliquid deepening the alignment between the two protocols.
Tough Competition Ahead
While Sky’s offer raises the stakes, other contenders bring their own strengths:
- Paxos is focusing on regulatory compliance and mainstream integrations with payment platforms.
- Frax Finance has promised to return all reserve revenue directly to its community.
- Agora is pitching itself as a neutral alliance of top-tier partners.
For validators, the choice comes down to whether they prioritize liquidity and proven track record (Sky), compliance (Paxos), community revenue-sharing (Frax), or broad partnerships (Agora).
The Bigger Picture
The outcome of this contest could shape the future of USDH and Hyperliquid’s role in DeFi. If Sky’s bid wins, USDH would launch with deep liquidity, attractive yields, and a tested security model. But with strong rivals in the mix, the validator vote promises to be one of the most closely watched governance events in the stablecoin space this year.
