Sky Enters Race to Issue Hyperliquid’s USDH Stablecoin with $8B Backing and 4.85% Yield

September 9, 2025

Sky, formerly known as MakerDAO, has thrown its hat into the ring to power Hyperliquid’s native stablecoin, USDH, joining competitors including Paxos, Frax, Agora, and Native Markets.

The proposal leverages Sky’s $8 billion balance sheet, seven years of operational history, and a B- S&P credit rating—the first-ever credit rating issued to a decentralized finance (DeFi) protocol. Hyperliquid, which processed nearly $400 billion in trading volume last month, has invited multiple issuers to compete for the lucrative USDH contract. The exchange holds $5.5 billion in USDC deposits, roughly 7.5% of that stablecoin’s supply. Validators are set to vote on September 14, with the Hyperliquid Foundation abstaining.

Sky’s plan offers several features designed to stand out:

• High Yield: 4.85% returns on all USDH held on Hyperliquid, exceeding U.S. Treasury rates, with revenue earmarked for HYPE buybacks and the Assistance Fund.
• Liquidity Assurance: $2.2 billion in instant redemption liquidity via its Peg Stability Module, giving institutional traders confidence for large-scale operations.
• Ecosystem Investment: A $25 million “Hyperliquid Genesis Star,” modeled after Sky’s Spark token farm ($1B+ TVL), to bootstrap DeFi on Hyperliquid. The protocol also plans to migrate its native buyback engine, generating over $250 million annually, onto Hyperliquid.

Other bidders are pursuing distinct strategies:

• Paxos: 95% of reserve earnings to HYPE buybacks, plus zero-fee USDC migration.
• Frax: A “community-first” wrapper model directing 100% of Treasury yield to users.
• Agora: Backed by State Street, VanEck, and MoonPay, pledges all net revenue to HYPE buybacks and emphasizes neutrality.
• Native Markets: Tied to Stripe’s Bridge and wallet provider Privy, but faces community concerns over potential conflicts of interest.

With Ethena also hinting at a bid, validators face a crowded field when they vote later this month.

The outcome will not only shape USDH’s structure, yield, and compliance with Genius standards but also determine whether Hyperliquid’s monetary layer is anchored to a DeFi-native protocol, a legacy stablecoin provider, or a corporate blockchain player.