In a significant development within the decentralized finance landscape, Ethena Labs has withdrawn its highly anticipated bid to issue Hyperliquid’s USDH stablecoin. This decision, announced by Ethena founder Guy Young, came after substantial feedback and concerns were raised by validators and community members regarding Ethena's role and broader ambitions within the Hyperliquid ecosystem.
Community Concerns Lead to Withdrawal
Ethena Labs initially joined the competitive Hyperliquid stablecoin contest, proposing to back USDH entirely with USDtb, a token linked to BlackRock’s BUIDL. Their bid also included pledges to return nearly all reserve revenue to the Hyperliquid community, cover migration costs from USDC, and inject substantial incentives. However, dialogue with validators highlighted key points of contention: Ethena was not a native Hyperliquid team, it operated multiple products beyond USDH, and its strategic goals extended far beyond a single exchange partnership. Rather than contesting these arguments, Ethena chose to step aside, effectively clearing the path for competitors like Native Markets, which Ethena’s founder publicly congratulated, acknowledging Hyperliquid's community-driven ethos.
Ethena's Unchanged Vision for Hyperliquid
Despite withdrawing from the USDH stablecoin issuance, Ethena Labs remains committed to its broader strategic plans on Hyperliquid. Guy Young affirmed that the project's long-term vision for the platform is unaltered. Ethena intends to prioritize several key initiatives, including the development of synthetic dollars (hUSDe), USDe-powered savings and card products, and specialized hedging flows designed for Hyperliquid markets. Furthermore, Ethena plans to explore advanced HIP-3 markets, such as reward-bearing collateral, modular prime broking, and perpetual equity swaps. These ongoing efforts underscore Ethena's resolve to innovate and "outcompete everyone else on product," reinforcing its dedication to the Hyperliquid ecosystem in other capacities.
