In the fast-paced world of decentralized finance (DeFi), Hyperliquid is making waves with its upcoming native stablecoin, USDH. Recently, a tweet from Castle Labs highlighted how Sky Ecosystem—formerly known as MakerDAO—is jumping into the fray, proposing to power USDH with impressive features. This move is part of a broader competition where major players are vying to back the stablecoin on Hyperliquid, a leading decentralized perpetuals exchange.

The excitement kicked off with a post from Sky Ecosystem, announcing "USDH powered by Sky." They touted 4.85% rewards on all USDH held on Hyperliquid, backed by $2.2 billion in USDC for instant redemptions, an $8 billion-plus balance sheet ready for deployment, and Sky's seven-year track record in the space. The proposal, penned by Rune Christensen (RuneKek), Sky's co-founder, goes into detail about how this partnership could supercharge Hyperliquid's ecosystem.

Understanding the USDH Proposal from Sky

Stablecoins like USDH are digital assets pegged to the US dollar, providing stability in volatile crypto markets. Hyperliquid, known for its high-performance trading platform, is auctioning off the rights to issue USDH, attracting bids from top names in crypto.

In his detailed thread, Rune outlines why Sky is the ideal partner:

• Instant Liquidity and Multichain Support: USDH would tap into $2.2 billion in USDC for seamless redemptions. It would also be natively multichain via LayerZero, allowing easy bridging to other blockchains.

• High Yields for the Community: Hyperliquid users could earn 4.85% on USDH holdings—higher than current T-bill rates—thanks to Sky's advanced risk management. These returns would fund HYPE token buybacks, benefiting the ecosystem.

• DeFi Growth via Sky Stars: Sky commits $25 million to create a "Hyperliquid Star," an autonomous project to bootstrap DeFi on Hyperliquid. This could attract billions in total value locked (TVL) through token farming, similar to Spark's 1.2 billion TVL success.

• Buyback System Integration: Sky plans to shift its buyback engine—handling over $250 million annually in profits—to Hyperliquid, boosting liquidity and setting a precedent for other protocols.

• Security and Customization: With a seven-year loss-free track record and an S&P credit rating (B-), Sky emphasizes safety. USDH could be customized, even made compliant with regulations like the GENIUS Act.

Rune emphasizes Sky's decentralized nature, ensuring alignment with Hyperliquid's goals without conflicts. Even if the proposal doesn't win, Sky is committed to integrating with Hyperliquid long-term.

For the full proposal, check out Rune's thread on X or the Hyperliquid governance discussion on Discord.

The Broader Competition: Curve, Ethena, and More

Castle Labs' tweet points out that Sky isn't alone. Curve Finance has discussed adding dUSDH, a fork of their crvUSD stablecoin, while Ethena is rumored to be preparing a proposal. Other bidders include Paxos, which promises 95% of yields for HYPE buybacks and full regulatory compliance, and Frax and Agora, as noted in various reports.

This "USDH wars" scenario, as one reply called it, echoes the infamous Curve Wars, where protocols battled for influence over Curve's governance token. A user wondered if that energy might spill over here, potentially driving intense competition and innovation.

Another reply highlighted the unprecedented level of rivalry to launch a product on a chain, underscoring Hyperliquid's rising prominence.

Why This Matters for Meme Tokens and Blockchain Practitioners

While USDH is a stablecoin, its launch could ripple into the meme token space. Stablecoins provide the liquidity backbone for trading volatile assets like memes. A robust USDH could make Hyperliquid a go-to platform for meme trading, with better yields attracting more users and capital.

For blockchain enthusiasts, this highlights the evolving DeFi landscape: protocols are no longer siloed but actively partnering to scale. Sky's rebrand and aggressive expansion show how established players are adapting to new chains like Hyperliquid.

As the proposal deadline approaches on September 10, 2025, keep an eye on Hyperliquid's governance. This could reshape stablecoin dynamics and fuel the next wave of DeFi growth.

Stay tuned to Meme Insider for more updates on emerging tokens and blockchain innovations. If you're diving into DeFi, tools like Sky's dashboard offer real-time insights into these ecosystems.