Disrupting Decentralized Settlement: Ethena’s Bold Venture
In an unprecedented move for DeFi, Ethena Labs has entered the competitive race to issue Hyperliquid’s native stablecoin, USDH. Launched on September 9, 2025, this initiative is far more than a routine offering. Most importantly, it introduces a revolutionary approach that combines technology, institutional backing, and robust community incentives. Because this proposal is supported by BlackRock, the world’s largest asset manager, Ethena steps up against industry heavyweights like Paxos, Frax Finance, Agora, Sky, and Native Markets in a high-stakes selection process. This move also signals a dramatic shift towards decentralized settlement channels as traditional finance’s influence merges with crypto innovation. [1]
Furthermore, Ethena’s proposal is designed to transform secure settlement layers by providing the backbone for a stable and scalable financial product. By integrating traditional finance elements and modern blockchain technology, the project is built to withstand regulatory scrutiny and market volatilities. Consequently, this alignment of conventional robustness with disruptive digital solutions could very well redefine how digital assets are managed and traded.
Unpacking the USDH Proposal
At its core, the USDH proposal signifies more than just the creation of another stablecoin. It represents a complete overhaul of existing models by leveraging a fully backed token approach. Ethena proposes to use USDtb, a stablecoin collateralized by BlackRock’s influential BUIDL fund. Besides that, their partnership with key institutions like Anchorage Digital for institutional custody and Securitize for advanced tokenization technology ensures that the product adheres to the highest standards of security and transparency. [2]
Therefore, the innovation here is twofold: it introduces institutional-grade safeguards while promising enhanced on-chain liquidity. It is a strategic move aimed at dissolving the conventional reliance on legacy systems, particularly the phase-out plan of the existing $5.5 billion in USDC. As a result, Hyperliquid is gearing up to embrace a new era that combines deep liquidity, regulatory compliance, and undeniable blockchain transparency. [3]
Revenue Sharing: Fostering a Community-Driven Ecosystem
Ethena’s innovative pitch extends beyond technology by incorporating a groundbreaking revenue-sharing model. Because the firm is dedicated to reinforcing DeFi’s core ethos of community empowerment, the proposal includes handing back up to 95% of all net revenue from USDH reserves directly to the Hyperliquid ecosystem. This fund will predominantly fuel HYPE token purchases and help support various growth initiatives within the community. In addition, the allocation of $75 million in incentives—with potential scaling to $150 million—serves as a strong catalyst to boost market participation and investor confidence. [3]
Because profit sharing is increasingly being recognized as a cornerstone of sustainable DeFi frameworks, Ethena’s approach is seen as a fundamental shift. This move helps bridge the gap between centralized revenue generation and decentralized governance, ensuring that the platform’s success is simultaneously the community’s success. As markets continue to evolve rapidly, such revenue models provide a balance of incentive and risk-sharing that few competitors have matched.
Competitive Landscape: Navigating a Fierce Contender Field
Ethena is not the sole contender in this transformative bidding process. Alongside it, well-known players such as Paxos, Frax, Agora, Sky (previously MakerDAO), and Native Markets have submitted proposals. Because of this competitive environment, each bid is meticulously scrutinized, with the potential winner set to command a colossal annualized revenue, with estimates putting Hyperliquid’s protocol revenues at over $1.3 billion per year. Most importantly, this competition underscores the transformative potential of stablecoin solutions in the current digital asset landscape. [3]
Additionally, the market dynamics are highlighted by the fact that in August, Hyperliquid’s perpetual contract trading volume reached an unprecedented $405.8 billion. Therefore, the demand for a reliable and highly liquid settlement token has never been greater, paving the way for a strategic overhaul that might reshape how high-volume trading venues operate. [1]
BlackRock’s Strategic Involvement
BlackRock’s participation infuses Ethena’s proposal with significant institutional credibility. A statement from BlackRock executive Robert Mitchnick, Head of Digital Assets, underscored the stability and innovation brought by the initiative. He noted, “We are excited to enable Ethena’s USDtb, which is 100% backed by BUIDL and uniquely positioned to offer institutional grade cash management and on-chain liquidity to Hyperliquid users.” This endorsement is not just symbolic; it represents a profound melding of traditional financial stewardship with futuristic digital asset management. [2]
Furthermore, BlackRock’s backing opens up avenues for bringing together talent, capital, and top-tier technology. Because the involvement of a global asset manager reduces perceived risk, participants across the ecosystem are more inclined to engage in the evolution of digital settlements. This partnership solidifies the notion that collaborations between conventional finance giants and blockchain innovators can yield transformative financial products.
Supporting Migration and Infrastructure Enhancements
To ensure a smooth transition, Ethena has pledged comprehensive support for migrating existing USDC trading pairs to the new USDH framework. This includes absorbing the costs related to technical adjustments and providing operational guidance for the shift. Therefore, users and institutions alike will benefit from a nearly frictionless switch to a platform designed for the future of on-chain transactions. [5]
Most notably, Ethena intends to integrate tokenized funds and equities on HyperEVM while launching pioneering products such as hUSDe, a Hyperliquid-native synthetic dollar. These initiatives not only bolster the platform’s technological capabilities but also attract a broader spectrum of investors from both the traditional and crypto realms. Because of this dual focus, the ecosystem is poised to realize significant growth in both usability and market penetration.
Enhanced Security Measures and Community Governance
Security remains at the forefront of Ethena’s strategy. To mitigate risks, the team introduced the concept of an elected validator “guardian network”. This innovative approach aims to distribute power among community representatives rather than maintaining a centralized control system. By reducing reliance on issuer-centric oversight, the protocol adheres more closely to DeFi’s foundational principles of decentralization and transparency. Consequently, this safeguard is expected to enhance user confidence and integrity across the network. [5]
Moreover, in light of recent security alerts—such as the recent NPM supply chain attack highlighted by Ledger’s CTO on Coindesk—Ethena has redoubled its commitment to rigorous auditing and continuous security enhancements. These additional measures ensure that the platform remains vigilant against emerging threats, securing over a billion downloads from its npm package ecosystem. Therefore, such proactive steps are crucial in establishing a resilient and trustworthy infrastructure in an environment where cyber threats are increasingly sophisticated. [4]
Looking Forward: The Future of On-Chain Stablecoins
If Ethena secures the necessary validator approval in the upcoming votes scheduled for September 14, Hyperliquid will not simply introduce a new stablecoin; it will redefine the landscape of digital asset settlement. Because the proposal advocates for a scalable, transparent, and highly liquid asset, the ensuing impact will likely set a new benchmark for market standards. Besides that, the near-frictionless migration process combined with institutional safeguards from BlackRock’s BUIDL fund makes this initiative a potential game-changer. [2]
In summary, this bold proposal could fundamentally alter how decentralized exchanges manage liquidity and harness community power. The convergence of institutional involvement, robust revenue-sharing schemes, and enhanced governance mechanics signals an exciting era for on-chain stablecoins. Most experts agree that these innovations will redefine digital finance, advancing both the security and efficiency of the market.
References
- CryptoTimes: Ethena Bids for Hyperliquid Stablecoin with BlackRock Fund
- XT.com: Ethena Joins Race for Hyperliquid’s Stablecoin With BlackRock-Backed Proposal
- CryptoSlate: Ethena Enters USDH Race Supported by BlackRock BUIDL
- Cointelegraph: Hyperliquid’s USDH Bidding Heats Up as Ethena Enters as Contender
- Coindesk: Ledger CTO Warns of NPM Supply-Chain Attack Hitting 1B Downloads
