Ethena’s Exit: A Drama in the Crypto World 🌐💰

On a rather unremarkable day in September 2025, Ethena Labs, with a flourish of dramatic flair, announced its departure from the Hyperliquid USDH stablecoin bidding race. The community, ever the discerning critic, had voiced its doubts about Ethena’s suitability for the role, much like a provincial theater troupe questioning the credentials of a traveling actor. Guy Young, Ethena’s founder, with a sigh that could have been mistaken for the wind rustling through the birch trees, declared that it was better to bow out gracefully than to clash with the audience’s expectations.

This act of concession paves the way for Native Markets, a contender whose star had already risen with the backing of major validators. The stakes in this contest are nothing short of monumental, involving control over $5.5 billion in stablecoin deposits-a sum that could generate a princely revenue of hundreds of millions annually, enough to make any crypto enthusiast’s heart flutter.

The Massive Stakes at Play

Hyperliquid, a platform as bustling as a Moscow market, currently holds $5.5 billion in USDC deposits, a figure that represents a staggering 7.5% of all USDC in circulation. It has become a veritable colossus in crypto trading, handling nearly 80% of all decentralized perpetual futures trading. In the month of August alone, the platform’s coffers swelled by a cool $106 million, with trading volumes approaching the dizzying heights of $400 billion.

The victor in the USDH contest stands to capture an estimated $220 million in annual Treasury yield, a sum that currently finds its way into the pockets of external stablecoin issuers like Circle. Instead, this bounty would enrich the Hyperliquid ecosystem and HYPE token holders through generous buyback programs, a prospect as enticing as a freshly baked pie in a cold winter.

Hyperliquid’s announcement of the USDH initiative was a strategic move to lessen its dependency on bridged assets like USDC. At present, 95% of the platform’s $5.6 billion stablecoin supply hails from USDC, meaning that the majority of the interest earned on these deposits enriches outside entities rather than the Hyperliquid community itself, a situation akin to a farmer tending fields that feed another’s table.

Native Markets Takes the Lead

With Ethena’s exit, Native Markets has emerged as the undisputed frontrunner. Led by Max Fiege, a man with the charm of a seasoned storyteller, the team has already secured 30.8% of validator support, a number that would have made any politician envious. Major validators, including the illustrious infinitefield.xyz and Alphaticks, have publicly pledged their allegiance to Native Markets, a show of solidarity that could rival the camaraderie of old friends gathered around a samovar.

Native Markets, a team born for this very competition, has set its sights squarely on building within the Hyperliquid ecosystem. Their proposal, as intricate as a Russian nesting doll, centers on leveraging Stripe’s Bridge infrastructure to issue USDH while dividing the revenue between HYPE token buybacks and ecosystem growth, a plan as thoughtful as a well-tended garden.

The team has vowed to allocate 50% of reserve yield to the Assistance Fund, a gesture of goodwill, and dedicate the remaining 50% to expanding USDH through strategic partnerships and innovative applications. This approach has struck a chord with validators, who value alignment with the ecosystem over the allure of external corporate interests, much like preferring a familiar face in the village over a stranger from afar.

Why Ethena Stepped Away

Ethena’s decision to withdraw followed a series of community discussions where validators raised three principal concerns. First, Ethena, being a non-native Hyperliquid team, operates across multiple blockchain ecosystems, a fact that raised eyebrows among the purists. Second, the company’s diverse portfolio of products, extending beyond stablecoins, could lead to conflicting priorities, a concern as valid as worrying about a fox guarding the henhouse. Third, Ethena’s broader business ambitions, which stretch far beyond a single exchange partnership, seemed to overshadow the community’s desire for a focused, ecosystem-centric solution.

Despite these reservations, Ethena had submitted one of the most competitive proposals in the race. The company offered to back USDH entirely with USDtb, a token linked to BlackRock’s BUIDL fund, a proposal as bold as a czar’s decree. Ethena also pledged to return 95% of reserve revenue to the Hyperliquid community and inject up to $150 million in ecosystem incentives, a gesture as generous as a nobleman’s gift to the peasantry.

However, the community’s preference for ecosystem-native solutions ultimately tipped the scales against Ethena. Guy Young, with a grace that belied the disappointment, acknowledged this reality and extended his congratulations to Native Markets, a move as dignified as a knight conceding defeat in a tournament.

The Competition Continues

The USDH race, however, is far from over. Paxos Labs, a contender with a 7.6% stake of validator support, has revised its proposal to include PayPal integration, a move as strategic as a chess player’s gambit. The regulated stablecoin issuer promises to embed USDH into PayPal and Venmo products, ensuring a wider reach, and pledges to contribute 95% of its earnings to HYPE buybacks, a commitment as solid as a gold ingot.

Other competitors, such as Frax Finance, Agora, and Sky (formerly MakerDAO), continue to vie for attention, though they have yet to secure the level of validator support enjoyed by Native Markets. Betting markets, those modern-day oracles, currently give Native Markets a 65% chance of emerging victorious, a probability as certain as the changing of the seasons.

The final decision will be rendered through an on-chain validator vote scheduled for September 14, 2025, between 10:00 and 11:00 UTC. This transparent governance process, as open and honest as a village meeting, allows HYPE token holders to align their stakes with validators who share their vision, a democratic process that would have made Tolstoy proud.

Market Impact and Future Plans

The announcement of the USDH contest has already had a profound impact on the HYPE token, pushing its price to new all-time highs above $52. The prospect of capturing hundreds of millions in annual revenue has drawn the attention of both retail and institutional investors, a crowd as eager as peasants awaiting the harvest.

Even though Ethena has withdrawn from the USDH race, the company remains committed to the Hyperliquid ecosystem. Young has outlined plans for synthetic dollar products, USDe-powered savings tools, and the exploration of new market opportunities, a strategy as ambitious as setting sail for uncharted waters.

What This Means Going Forward

Ethena’s withdrawal serves as a poignant reminder of the power of community preferences in decentralized governance systems. The decision underscores Hyperliquid’s dedication to ecosystem-first solutions, a philosophy as enduring as the Russian spirit. The September 14 vote will conclude one of the most competitive and transparent stablecoin selection processes in crypto history, a saga that has set new standards for community involvement in major protocol decisions, a tale that will be told for years to come, perhaps even in the annals of the Kremlin itself.

2025-09-12 01:31