- Ethena Labs withdrew its bid to issue the USDH stablecoin on Hyperliquid after the community raised concerns about its non-native status and external focus.
- The team will now pivot to developing native Hyperliquid products while Native Markets likely leads USDH issuance.
Ethena Labs has pulled its bid to issue the USDH stablecoin on Hyperliquid. The decision came after the community raised concerns about the team’s non-native status. Validators worried that Ethena’s goals were not fully aligned with Hyperliquid’s ecosystem.
Founder Guy Young congratulated the Native Markets team, which now leads stablecoin issuance. He noted that Hyperliquid’s governance process shows that small, community-driven projects can succeed, even without major financial backing.
The last few days have been incredible to witness. I've never seen a community rally around and engage with passion like this before.
Following direct discussions with individuals in the community and validators we have taken onboard some of the concerns, namely:
-Ethena is not…
— G | Ethena (@gdog97_) September 11, 2025
What Ethena Proposed
Ethena had planned to issue USDH through Anchorage Digital Bank’s upcoming USDtb token. This token would be indirectly backed by BlackRock’s $2 billion BUIDL fund. The plan had support from BlackRock’s head of digital assets, Robert Mitchnick, and Anchorage CEO Nathan McCauley.
Ethena also promised to direct 95% of USDH reserve revenues to Hyperliquid. The funds would go toward community initiatives, token buybacks, and validator rewards. Despite these commitments, validators remained concerned about centralization and the team’s external focus.
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Shifting Focus to Native Products
Even though it left the USDH race, Ethena is still building within Hyperliquid. The team is developing native products like synthetic dollars (hUSDe), USDe-based savings accounts, card spending tools, and equity-based perpetual swaps.
Ethena will use its $13 billion USDe balance sheet to provide liquidity and expand Hyperliquid’s HIP-3 markets. The team also plans new innovations such as modular prime broking and reward-bearing collateral. Young said, “Our goals extend beyond working with a single exchange,” signaling that Ethena will remain an important part of the ecosystem.
Impact on Hyperliquid
This withdrawal marks a shift for Hyperliquid. Native teams now have the advantage over outside entrants. With Native Markets likely controlling USDH, the exchange’s decisions on stablecoin issuance will shape its growth, risk, and community trust for years to come.
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