Hyperliquid Faces Backlash Over Stripe-Linked USDH Stablecoin Proposal

Hyperliquid is facing backlash over its proposed proprietary stablecoin, USDH, via collaboration with Stripe. Hyperliquid is a Decentralized Exchange (DEX) and a layer-1 blockchain that has dominated the DeFi derivatives market. Now, the exchange is facing pushback against the USDH, which has the potential to transform Hyperliquid’s economic foundation and deliver millions in annual revenue.

Hyperliquid Faces Pushback Against USDH Proposal

At the moment, Circle's USDC makes up roughly 95% of the $5.5 billion in stablecoins on Hyperliquid. The validator vote is slated for September 14, and big crypto players and payment processors are now in a high-stakes race to control the issue of USDH.

The most divisive proposal comes from Stripe’s Bridge platform. Critics within the Hyperliquid community warn that ceding control of the exchange’s monetary layer to Stripe, already building its own blockchain, Tempo, and owning wallet infrastructure through Privy, could undermine the ecosystem’s independence.

Nick vanEck, CEO of Agora, which submitted a competing proposal, voiced sharp opposition: “If Hyperliquid relinquishes their canonical stablecoin to Stripe, a vertically integrated issuer with clear conflicts, what are we even doing?”

MoonPay, part of the Agora coalition, also criticized Stripe’s bid. President Keith Grossman argued that MoonPay brings greater regulatory coverage and user reach, saying, “USDH deserves scale, credibility and alignment – not BS capture.”

Several heavyweight bidders are offering sharply different models for USDH. Paxos, a regulated issuer with more than ten years of experience, suggested spending 95% of reserve revenues to purchase back HYPE tokens. This would match the interests of Hyperliquid's governance token holders with those of Paxos. Frax said it would put the needs of the community first and pass on 100% of Treasury yield to consumers without taking a cut.

At the same time, Agora and its partners promised to stay neutral, with all of their profits going to HYPE buybacks or Hyperliquid's Assistance Fund. Their pitch focused on how their interests were in line with Hyperliquid's long-term ecosystem, not with those of other companies. The field could become even more competitive, since the synthetic dollar procedure Ethena suggests a possible late arrival.

Hyperliquid controls nearly 80% of DeFi derivatives volume, making USDH’s future a lucrative prize. Whoever wins the mandate to issue USDH will gain not only control of a potential replacement for billions in USDC liquidity but also access to stablecoin yield from U.S. Treasuries.

The deadline for proposals closes on September 10, with final validator votes scheduled for September 14. The Hyperliquid Foundation confirmed it will remain neutral, leaving the outcome entirely in the hands of validators.