Sky makes bid to issue Hyperliquid’s USDH stablecoin

Sky, the decentralized finance protocol formerly known as MakerDAO, has thrown its hat into the ring to issue Hyperliquid’s upcoming stablecoin USDH.

Summary

• Sky, formerly MakerDAO, has entered the race to issue Hyperliquid’s USDH stablecoin.
• Its proposal offers $2.2B in liquidity, a 4.85% yield, and a $25M growth fund.
• A validator vote on Sept. 14 will decide the winner among competitors such as Sky, Paxos, Frax, and Agora.

Rune Christensen, the founder of Sky (SKY), revealed the proposal in a detailed Sept. 9 post on X, presenting Sky as the most experienced and well-resourced contender to shape the stablecoin’s future.

Hyperliquid’s stablecoin contest intensifies

Hyperliquid (HYPE), a decentralized exchange, announced on Sept. 5 that its community would vote on which issuer will manage USDH, its native stablecoin. The competition has already drawn offers from entities such as Paxos, Frax Finance (FRAX), and Agora.

A validator vote will take place on Sept. 14, with proposals due by Sept. 10. The high-stakes process has driven Hyperliquid’s HYPE token to an all-time high of $51.92.

Sky’s entry significantly raises the bar. With more than $8 billion in circulation across its USDS and Dai (DAI) tokens and $13 billion in collateral backing them, the protocol has established itself as one of the most trusted names in DeFi.

Sky’s proposal for USDH

According to Christensen, the partnership would equip USDH with $2.2 billion in instant redemption liquidity through Sky’s Peg Stability Module, making it easy to swap into USD Coin (USDC) at scale. The stablecoin would be natively multichain via LayerZero (ZRO), extending Hyperliquid’s reach across blockchains.

Perhaps most strikingly, Sky pledged that all USDH on Hyperliquid would generate a 4.85% yield, higher than U.S. Treasury bills, with the proceeds dedicated to buybacks of the HYPE token.

Beyond immediate liquidity and returns, Sky promised ecosystem growth through a $25 million “Hyperliquid Star,” a fund designed to bootstrap new DeFi projects on the exchange and attract billions in total value locked. 

Risk management was also a centerpiece of the proposal, with Christensen highlighting frameworks modeled on Basel III banking standards and pointing out that Sky is the only stablecoin issuer with an S&P credit rating, currently graded at B-.

The plan also calls for Sky to relocate its buyback engine, responsible for $250 million in annual profits, to Hyperliquid, a move intended to boost liquidity and align the protocol more tightly with the exchange. Christensen stressed that USDH would inherit the same design as DAI and USDS, ensuring transparency and reliability from the start.

A competitive race ahead

Sky is facing stiff competition, with Paxos promising compliance and integrations with popular payment apps, Frax Finance promising to give back all reserve revenue to the community, and Agora positioning itself as a neutral alliance of leading partners.

Still, its offer of deep liquidity, attractive returns, and a proven security track record could resonate strongly with validators.

Source: https://crypto.news/sky-bid-issue-hyperliquid-usdh-stablecoin-2025/