Ethena Labs, in a surprising twist, has decided to step back from Hyperliquid’s USDH stablecoin competition, after being gently reminded by the community that they might not be the most… native of players. 🦄
- • Ethena pulled its USDH proposal after validators raised eyebrows about its non-native status and grander ambitions. 🤡
- • The rival Native Markets team is now the favorite to lead stablecoin issuance on Hyperliquid. 🏆
- • Ethena will now focus on building hUSDe and other native products, backed by its $13B USDe balance sheet. 💸
According to a Sept. 11 post on X by Ethena (ENA) founder Guy Young, the decision follows direct conversations with validators and delegates who raised doubts over Ethena’s focus and alignment with Hyperliquid’s (HYPE) ecosystem. 🤔
Community Pushback Leads to Withdrawal
In a heartfelt letter, Young outlined three major grievances from the Hyperliquid community: Ethena’s lack of native ties, its ambitious plans beyond USDH, and the suspicion that their growth strategy was more about expanding than aligning. 🤷‍♂️
“Congratulations to the Native Markets team. You deserve this,” Young wrote, praising the rival proposal that has gained traction. He added that Hyperliquid’s governance process demonstrated how smaller, community-driven projects could succeed regardless of pedigree or 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
Ethena’s initial bid proposed issuing USDH through Anchorage Digital Bank’s upcoming USDtb token, indirectly collateralized by BlackRock’s $2 billion BUIDL fund. 🧱
Supported by BlackRock’s head of digital assets, Robert Mitchnick, and Anchorage’s CEO, Nathan McCauley, the team argued this structure would be as sturdy as a brick house. 🏗️
Furthermore, Ethena pledged to direct 95% of USDH reserve revenues to Hyperliquid through community funds, token buybacks, or validator rewards. A generous offer, if you ignore the fact that it was still seen as too centralized. đź§
Ethena Pivots to Native Product Development
Ethena’s team, ever the optimists, insists they’re still all in on Hyperliquid, even after the setback. Their new plan? Native products, synthetic dollars, and a whole lot of hype. 🚀
The team also plans to leverage its $13 billion Ethena USDe balance sheet to provide liquidity and expand Hyperliquid’s HIP-3 markets, introducing innovations like modular prime broking and reward-bearing collateral. 💸
“Our ambitions extend beyond working with just one partner exchange,” Young said, signaling that Ethena intends to remain a key player in Hyperliquid’s ecosystem despite the setback. 🌍
The outcome marks a turning point for Hyperliquid, where local builders have been given the spotlight over outsiders. Native Markets now holds the keys to USDH’s future, and the exchange’s risk profile could change forever. 🧩
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2025-09-12 09:56