Following feedback from validators and community members,
Ethena Labs has decided to withdraw its proposal to launch the USDH stablecoin for Hyperliquid.
Guy Young, the founder of Ethena, confirmed the withdrawal in a
statement
posted on X (formerly Twitter) on September 11th. He stated that the decision was made in light of concerns raised regarding Ethena’s role and position within the Hyperliquid ecosystem.
Young explained that discussions with validators highlighted three key issues: Ethena is not a core, native Hyperliquid entity, the company manages multiple products beyond just USDH, and Ethena’s overall strategic goals extend beyond a single partnership with the exchange.
According to Young, Ethena chose to withdraw its proposal rather than challenge the arguments presented by the community.
Earlier in the week, Ethena had entered the
Hyperliquid stablecoin competition, joining several other teams, including
Paxos, all vying for the opportunity to manage the USDH stablecoin.
Ethena’s proposal involved backing USDH entirely with USDtb, a token associated with
BlackRock’s BUIDL. The company also committed to returning nearly all revenue from the reserve to the Hyperliquid community, covering the costs of migration away from
USDC, and injecting at least $75 million in incentives.
Native Market gains momentum
Ethena’s withdrawal leaves Native Markets as the frontrunner, a fact that Young publicly acknowledged and congratulated them on. CryptoSlate previously noted that the
Native Market team appeared to be the preferred choice amongst the competing proposals.
Young also addressed critiques aimed at Native Markets’ legitimacy, arguing that their success demonstrates the value of Hyperliquid’s community-centric philosophy.
Enrollment Closing Soon…
Secure your spot in the 5-day Crypto Investor Blueprint before it disappears. Learn the strategies that separate winners from bagholders.
Brought to you by CryptoSlate
He stated:
“It doesn’t matter how big your operation is, what your background is, what your pedigree is or how large your financial resources are. It’s an equal opportunity situation where newer competitors are given an honest chance to succeed and can win over the community.”
Broader plans
While Ethena’s USDH bid is now off the table, Young emphasized that the project’s overarching plans for engagement within the Hyperliquid ecosystem remain intact.
He detailed intentions to prioritize other product offerings, including synthetic dollars (hUSDe), USDe-powered savings and card products, in addition to hedging mechanisms built specifically for Hyperliquid markets.
Ethena also plans to investigate HIP-3 markets, which includes reward-bearing collateral, modular prime broking, and perpetual equity swaps.
According to Young, these various initiatives underscore Ethena’s long-term approach that will be focusing on innovation in the space.
He stated:
“We will continue to do what we have always done from the beginning: outcompete others on product, without exception.”