If you're into blockchain and crypto trading, you've probably heard of Hyperliquid – that powerhouse perpetual futures DEX shaking up the DeFi scene. Now, they're gearing up to launch their native stablecoin, USDH, and the competition to issue it has been fierce. Recently, Francesco from Castle Labs dropped a killer thread on X breaking down proposals from Agora, Sky (formerly MakerDAO), and Ethena (which has since withdrawn). Let's unpack this and see what it means for the ecosystem.

First off, what's USDH? It's Hyperliquid's upcoming dollar-pegged stablecoin designed to supercharge trading on the platform. With perp trading volumes skyrocketing, a solid stablecoin is key for liquidity and stability. Multiple big players submitted bids to handle its issuance, each bringing their own flavor of backing, revenue sharing, and perks.

The thread highlights three main contenders, complete with a handy comparison table. Here's a recreated version based on the insights shared:

Issuer	Backing & Compliance	Value Capture	Liquidity & Market Structure	Governance & Risk	Extras / Differentiators
Agora	GENIUS-compliant, State Street (custody), VanEck (management), Treasuries/repos/cash, bank partners for liquidity	100% net revenue to Hyperliquid Assistance Fund or HYPE buybacks	$10M seeded liquidity, LayerZero interoperability, Rain payments, EtherFi consumer cards, MoonPay	Neutral (not competing), risks in multi-partner execution	Institutional credibility (State Street, VanEck), global reach via Rain, LayerZero, consumer distribution (EtherFi)
Sky	Identical to DAI/USDS, backed by $13B collateral (USDC, Treasuries, RWAs, DeFi), 7+ years history, not GENIUS initially	4.85% return on USDH held on Hyperliquid (4.75% SSR + 10bps integrator reward)	$2.2B USDC instant redemption (PSM), multichain via LayerZero, sUSDS conversions, Stars system for yield routing	Basel III frameworks, S&P B- rating, risks: no GENIUS status, complex ecosystem	Genesis Star ($25M seed), $250M annual profits for buybacks, transparency via info.sky.money, strong commitment
Ethena	Backed by USDTb (Anchorage OCC bank), BlackRock BUIDL, GENIUS-compliant	>95% net reserve yield to Hyperliquid (buybacks, AF, validator rewards), covers redenomination costs	USDH in USDe collateral basket, hUSDe fork, $75-150M incentives, invested in Based	Validator guardian model for freezes/reissues, mix of institutional custody and onchain oversight	Prime brokerage angle, RWA rails (Securitize, Anchorage), future optionality with USDe/sUSDe

This table captures the essence of each proposal, from how the stablecoin is backed to unique selling points.

Breaking Down the Proposals

Starting with Agora (via @withAUSD), they're all about institutional-grade stability. Their setup uses top-tier partners like State Street for custody and VanEck for management, ensuring compliance with GENIUS standards – that's a big deal for regulatory peace of mind. Reserves are in safe assets like U.S. Treasuries and cash. The killer feature? 100% of net revenue goes back to Hyperliquid through buybacks or their assistance fund, aligning incentives perfectly. Liquidity gets a boost with $10M seeded right at launch, plus integrations for cross-chain moves via LayerZero and consumer-friendly options like cards from EtherFi. Risks are mostly operational, but the upside is massive scalability.

Next up, Sky (from @SkyEcosystem) brings the legacy firepower. USDH would mirror their proven DAI/USDS model, backed by a whopping $13 billion in diverse collateral, including real-world assets (RWAs). They've got seven years of battle-tested history, though they're not GENIUS-compliant out the gate (but have a path to it). Value capture is straightforward: a juicy 4.85% return for holders on Hyperliquid. Liquidity is insane with instant redemptions via their Peg Stability Module and multichain support. Governance follows Basel III banking standards, and they're the only stablecoin with an S&P rating. Unique perks include a $25M seed for a Hyperliquid-specific "Genesis Star" to farm tokens and attract TVL, plus full transparency on their dashboard. The complexity of their ecosystem might be a hurdle, but their commitment shines through – they're building integrations regardless of the vote.

Finally, Ethena (@ethena_labs) threw their hat in with a BlackRock-backed proposal but withdrew amid community pushback. Their plan involved backing USDH with USDTb, collateralized via BlackRock's BUIDL fund, ensuring GENIUS compliance. They'd return over 95% of yields to Hyperliquid for buybacks and rewards. Liquidity incentives were hefty at $75-150M, with USDH integrated into their USDe ecosystem. Governance featured a validator model for security, and extras like RWA rails added future-proofing. Despite the withdrawal, it's worth noting as it highlights the competitive landscape – even big names like Arthur Hayes were buying into Ethena ahead of the vote.

Why This Matters for Meme Tokens and Beyond

While USDH isn't a meme token itself, a robust stablecoin on Hyperliquid could turbocharge meme trading in perps. Better liquidity means smoother trades, lower slippage, and more opportunities for those wild meme coin swings. Plus, with revenue flowing back to the ecosystem, it could fuel more innovation in blockchain tech.

If you're following this space, check out the original thread on X for the full scoop. Hyperliquid's decision could reshape stablecoin dynamics – stay tuned for the vote outcome!

For more insights on meme tokens, stablecoins, and blockchain news, keep it locked on Meme Insider.