Hyperliquid, a decentralized exchange, has announced a significant governance experiment linked to its proposed stablecoin USDH. This event has drawn community attention and spurred active discussions.
Governance Rules and Voting
Hyperliquid outlined the voting process through the following rules:
* **Two-step validator switch** – users must first unstake, then re-stake with a new validator. * **One-day cooldown** – after staking to a new validator, users must wait 24 hours before unstaking again. * **Critical warning** – moving HYPE from staking balance to spot removes voting rights. * **On-chain voting** – quorum requires two-thirds of stake, after which the winning bidder gains rights to bid on the USDH ticker via the spot deploy gas auction. * **Foundation abstention** – Foundation validators will not influence results; instead, they will support whichever team has the most non-Foundation votes.
Why USDH Matters for Hyperliquid
Hyperliquid dominates 75% of the DeFi perpetual futures market, with around $5.6 billion in stablecoin liquidity, 95% of which is USDC. This translates to roughly 10% of Circle's business, which is about $200 million in annual revenue. By auctioning USDH, Hyperliquid aims to keep the yield flowing back into its own ecosystem.
Who’s in the Race for USDH
Several teams have submitted bids to participate in the USDH auction:
* **Native Markets** – backed by Hyperliquid advisor Max Fiege, is leading the pack with around a 70% chance of winning. * **Paxos** – known for launching BUSD and PayPal’s PYUSD, offers tight integration with PayPal/Venmo and $20 million in incentives. * **Ethena Labs** – partnering with Anchorage Digital, proposes a 95% yield share back to the community, but currently has only ~4% backing.
Others in the mix include Sky (MakerDAO), Frax Finance, and Agora, all promising heavy revenue shares to the community.
Hyperliquid's experiment has already reshaped the conversation around stablecoins, governance, and value capture in DeFi. Regardless of the outcome, this process transforms current governance approaches in the crypto industry.
