Hyperliquid’s interest-earning USDH poses a challenge to USDC’s dominance among stablecoins

Hyperliquid has introduced the HYPE/USDH spot pair, representing a major milestone in its plan to generate and retain value within its own network. USDH, the platform’s proprietary stablecoin pegged to the US dollar, is designed to reclaim more than $220 million in annual Treasury yield that previously went to third-party issuers such as

. By converting $5.6 billion worth of holdings into USDH, Hyperliquid intends to channel these profits into HYPE token repurchases, user incentives, and its Assistance Fund, thereby boosting the token’s utility and reinforcing the community’s economic independence. On September 14, 2025, validators voted to appoint Native Markets as USDH’s issuer. The stablecoin will be supported by cash and U.S. Treasury assets, with management handled via Stripe’s Bridge platform.

USDH sets itself apart by offering yield to holders, unlike Circle’s USDC, which is restricted by U.S. law from paying interest. This feature gives USDH a competitive advantage in the DeFi space, where yield is a key factor for liquidity. Native Markets’ plan to split reserve yields equally between HYPE buybacks and ecosystem growth demonstrates a strong alignment between the issuer and Hyperliquid’s community. Although Paxos,

, and Frax proposed higher revenue shares (95-100%), validators favored deeper ecosystem integration and technical compatibility over simply maximizing financial returns.

Hyperliquid’s introduction of USDH signals a broader trend among stablecoin projects to take greater control over their financial frameworks. The stablecoin’s integration with Hyperliquid’s HyperEVM

enables efficient on-chain transactions and slashes trading fees by 80% compared to other stablecoin pairs on the platform. This operational improvement, together with USDH’s 1:1 redemption and strong collateral backing, helps mitigate concerns about losing its peg during volatile markets. Institutional adoption is further supported by FalconX, which offers secure custody solutions for both HYPE and USDH.

The rollout of USDH also heightens the rivalry with USDC and

, which together account for over 90% of the stablecoin sector. Hyperliquid’s approach to capturing a share of this market relies on attracting liquidity through yield incentives and governance-based fee changes. While Circle has responded by adding native USDC support on Hyperliquid, the platform’s previous dependence on outside stablecoins highlights the strategic role of USDH in reducing censorship risks and strengthening platform stability. Experts point out that USDH’s future will hinge on successfully transitioning $5.6 billion in USDC deposits while maintaining stability amid regulatory and economic challenges.

For HYPE holders, the USDH debut brings both potential benefits and uncertainties. The proposal to cut supply by 45%—burning 421 million tokens—aims to offset the $12 billion in scheduled token unlocks over the next two years. While this could increase scarcity, it also raises questions about how it will affect incentives and token allocation within the ecosystem. This tension is reflected in current market trends, with HYPE trading between $47 and $49 in July 2025, a significant rise from $3.81 in November 2024. Major investors, including Arthur Hayes’ Maelstrom Fund, are closely watching large holder activity and the platform’s ability to maintain its 70% dominance in DeFi perpetuals trading.