Native Markets Wins USDH Stablecoin Race on Hyperliquid

Native Markets has won the bid to build decentralized exchange Hyperliquid’s native stablecoin USDH, with experts saying the choice reflects a gamble on speed and alignment over the safety of established issuers.

The team, which announced the news on Sunday, Sept. 14, beat out well-known firms like Paxos, BitGo, Ethena, and Frax in a community vote. Native Markets submitted the first proposal and was picked by a two-thirds majority of staked HYPE tokens. USDH will start with a small testing phase in the next few days, before a full launch.

The vote underscores how Hyperliquid’s community prefers speed, alignment, and commitment over big names, experts told The Defiant. Native Markets’ proposal promised a fast rollout, direct integration with the platform, and a plan to return earnings to the ecosystem, even though the team is new and untested.

‘Willing to push boundaries’

“Native Markets was chosen because they move fast, they innovate, and they fit Hyperliquid’s vision,” said Sid Sridhar, founder of Bima Labs. “That is how disruption happens – not by the incumbents who have the most assets under management or the biggest compliance teams, but by new entrants who are hungrier, more agile, and willing to push boundaries.”

Chandler De Kock, co-founder of Silhouette, echoed the point, noting Native Markets had been pushing to launch a stablecoin for over a year. “Their standing within the ecosystem made them the clear choice,” De Kock said. “Other, more established players had stronger track records, but for them, USDH would have been just another project. For Native Markets, it’s their core focus, and that alignment mattered to validators.”

If Native Markets succeeds, “it will be a classic story of an outsider seizing an opportunity that incumbents were too slow or too cautious to capture,” Sridhar added. “If they fail, it could damage confidence not just in Hyperliquid’s stablecoin but in the broader effort to make stablecoins mainstream.”

Experts also pointed to Native Markets’ Hyperliquid-first design as a key reason behind the vote. “Basically everything is staying in-house,” said Jonathan Morgan, senior crypto analyst at Stocktwits, adding that the 50/50 split of reserve yield between HYPE buybacks and ecosystem growth likely helped win support.

Validators also valued the plumbing, Morgan said, with compliance handled through Bridge (using Stripe’s KYC/AML system), off-chain reserves managed by BlackRock, and tokenized reserves on-chain through Superstate.

Building Trust

On the other hand, experts cautioned that stablecoins ultimately depend on trust – and that’s where Native Markets still has the most to prove. Established issuers like Paxos have years of experience with audits, compliance checks, and regulatory oversight. For context, Paxos is the issuer of PayPal’s PYUSD.

“The established issuers have spent years building these defenses. They have battle-tested infrastructure, they have endured regulatory fire drills, and they have deep institutional relationships,” Sridhar said. “When you select a newer issuer, you are trading away some of that history. That does not mean failure is inevitable, but it does mean the bar for proof is higher.”

Other risks come down to the mechanics. Morgan noted that collateral, issuance rails, and liquidity only work if the systems and counterparties behind them run without disruption. “If Bridge freezes or Superstate lags when there’s a lot of demand and activity, it could cause some problems in the future.”

Meanwhile, some experts see risks in how the decision was made. Nic Puckrin, CEO of Coin Bureau, said the process has already raised eyebrows. “Some suggest the outcome was pre-determined, which has raised governance concerns and thereby trust issues,” Puckrin said. “If trust in the selection process is shaky, it could spill over into skepticism about USDH itself.”

He also emphasized that the hybrid reserve model is risky, as relying partly on off-chain assets and external managers is “fine when things are smooth, but peg volatility could become exaggerated in its early days. “

Hyperliquid’s native token HYPE has surged 21% over the past two weeks and is currently trading at $53.49.