Hyperliquid has introduced its new stablecoin USDH, aimed at increasing financial autonomy and redistributing values within the ecosystem.
Mint and Redeem Process Design
The life cycle of USDH is built around minting and redeeming. The process begins with governance: Hyperliquid validators vote to grant Native Markets the right to issue and manage USDH, and to give the "USDH" ticker its official status. After this, rules and contracts are put in place through a Hyperliquid Improvement Proposal (HIP). The token is deployed natively on HyperEVM for tight integration, while also keeping ERC-20 compatibility for external access.
Before full release, USDH will go through a limited testing phase. Each mint or redeem is capped at about 800 USD, and participation may be limited to a whitelist of early users. This small-scale trial is meant to test security, reserve efficiency, and user operations.
Reserve Mechanism and Execution Path
For users, minting USDH is simple. They send USDC, fiat, or other supported assets into the reserve system. These assets may be off-chain cash and treasury bills or on-chain tokenized bonds. Once the reserve is confirmed, the smart contract issues the same amount of USDH to the user. Redemption works in the opposite way: users submit a request, burn or lock their USDH, and then receive the same value of assets from the reserve pool. At first, this process is limited in size and scope, but later it will run on a larger scale without restrictions.
Strategic Motivation for USDH
The main reason for creating USDH is to stop value from leaving the ecosystem. Today, Hyperliquid holds more than five billion dollars of liquidity mostly in USDC. The interest from these reserves goes to the external issuer, not to Hyperliquid. USDH is designed to capture this yield and use it to support token buybacks, user incentives, and infrastructure development. Another reason is to reduce external dependency. USDC can be frozen by its issuer due to regulation, and bridge-based USDC adds extra security risks. By issuing its own stablecoin, Hyperliquid reduces these outside risks and gains more control.
USDH is a significant step for Hyperliquid in the realm of stablecoins. It is not just a technical product but a strategic choice to enhance ecosystem autonomy and capture reserve value. Whether USDH can overcome user habits and strong external competition remains uncertain.
