While established financial giants like Paxos and industry darlings such as Frax competed for the coveted right to issue Hyperliquid’s native USDH stablecoin, it was Native Markets—a startup formed mere weeks before the contest—that swept the validator vote with a commanding 70% majority.
The victory carries the unmistakable whiff of controversy that follows any David-versus-Goliath narrative in decentralized finance. Critics immediately raised eyebrows at potential validator stake concentration, questioning whether Hyperliquid’s governance truly reflects the decentralized ethos it purports to champion.
Meanwhile, supporters hailed the outcome as authentic community decision-making in action—though one wonders if “authentic” adequately describes a process where established players like Ethena Labs withdrew citing concerns about platform nativity.
Perhaps most intriguing is how Native Markets managed to outflank competitors with considerably deeper pockets and longer track records. Paxos, despite brandishing PayPal integration like a golden ticket, couldn’t overcome validator skepticism.
The startup’s proposal apparently struck the right chord by emphasizing native integration with HyperEVM while promising a revenue-sharing model that splits reserve yields between HYPE token buybacks and ecosystem development. Native Markets had emerged as the prediction markets frontrunner even before the official validator decision was announced.
The economic implications extend well beyond mere bragging rights. Analysts project USDH could generate hundreds of millions in annual revenue while reducing Hyperliquid’s dependence on external stablecoins like USDC, which currently represents 7.5% of platform supply. USDH enters a highly competitive landscape where Circle’s USDC commands nearly $6 billion in deposits on Hyperliquid.
Native Markets’ hybrid reserve strategy—combining on-chain partners like Superstate with traditional custodians including BlackRock—suggests a pragmatic approach to backing that acknowledges regulatory realities. The stablecoin space operates with minimal regulatory oversight, as federal authorities have yet to establish specific frameworks for these digital assets.
The rollout strategy reveals calculated caution rather than startup bravado. Native Markets plans an initial test phase capping transactions at $800, followed by USDH/USDC spot pair introduction before full-scale operations commence.
This measured approach contrasts sharply with the immediate full-deployment strategies favored by many competitors.
Whether this cautious deployment reflects wisdom or hesitation remains to be seen. What’s certain is that Native Markets now holds exclusive rights to channel billions in potential liquidity through USDH—a remarkable achievement for a company that barely existed when the competition began.
The real test lies not in winning validator hearts, but in maintaining community confidence while scaling operations.
