What Is USDH? A Hyperliquid Stablecoin That's Getting Attention

In the crypto world, the term stablecoin is already familiar. However, recently a new name has emerged that has attracted quite a bit of attention:USDH. This stablecoin was developed byHyperliquid, one of the largest perpetual futures exchanges in the DeFi space.

The introduction of USDH aims to reduce Hyperliquid's dependence on other stablecoins like USDC and USDT. We'll discuss what USDH is, how it works, and who's competing to manage it.

That way, you can better understand why these stablecoins are important to the DeFi ecosystem.

Read Also: What Is a Hyperliquid Airdrop?

What is USDH and the Role of Hyperliquid?

USDH is a stablecoin designed specifically by Hyperliquid. This token will serve as an alternative to other popular stablecoins such asUSDC to USDTwhich has been the mainstay of many DeFi platforms.

With USDH, Hyperliquid hopes to strengthen its internal ecosystem while creating new revenue streams.

Hyperliquid itself is known as a decentralized derivatives exchange with fantastic trading volume.

Data from DefiLlama shows that in just one month, Hyperliquid recorded transactions of up to US$378 billion. This figure makes it a major player in the DeFi space.

Through the launch of USDH, Hyperliquid aims to reduce its dependence on external issuers.

Furthermore, this stablecoin is expected to attract more traders and add value to Hyperliquid's ecosystem token, HYPE. Therefore, USDH is not just a new token, but a crucial part of Hyperliquid's growth strategy.

Competition to Issue USDH

Hyperliquid is opening up opportunities for third parties to participate in issuing USDH. At least six organizations have submitted proposals, and several have received significant community attention.

PaxosPaxos is a leading candidate. They plan to back USDH with safe assets such as US Treasury bills and repurchase agreements. Paxos also pledged to use 95 percent of the interest generated from reserves to support HYPE token buybacks.

Apart from that there isFrax Finance, which offers USDH integration with its frxUSD stablecoin. This mechanism allows users to easily exchange frxUSD, USDC, USDT, or US dollars for USDH.

While Frax hasn't provided full details on the reserve interest, it does mention options to increase HYPE staking returns or provide incentives for active traders.

Do not miss Now, known as a white-label stablecoin issuer. They proposed sharing 100 percent of reserve revenue to support the HYPE token. Agora's USDH reserves would be managed by major firms like State Street and VanEck.

Meanwhile, Native Marketsemerged as a new player led by Max Fiege. They plan to leverage BlackRock's offchain reserves and Stripe's onchain reserves through its Bridge platform.

This plan is considered ambitious, although some communities still question the risks that may arise.

Read Also: How to Play Hyperliquid Airdrop

The Impact of USDH on the Crypto Ecosystem

The emergence of USDH will have a huge impact, not only for Hyperliquid but also for DeFi users at large.With stablecoinsOn its own, Hyperliquid can be more independent and less dependent on external publishers.

That means more control over liquidity and the potential for profits returning to the community.

Moreover, the competition between organizations wanting to issue USDH shows how attractive this project is.

Each candidate brings a different strategy, ranging from the use of secure backups, incentives for the community, to plans for expansion into consumer applications.

For traders, USDH has the potential to be a stable and profitable new option, especially if Hyperliquid truly utilizes the reserve interest to support HYPE or reward active users.

This could increase USDH's appeal as a stablecoin that is more than just a medium of exchange.

Conclusion

USDH is a new stablecoin from Hyperliquid that's poised to compete with USDC and USDT. With multiple parties interested in issuing it, USDH has significant potential to strengthen the DeFi ecosystem.

For traders, this stablecoin can be an attractive alternative, supported by a transparent reserve distribution strategy.

Want to stay updated on stablecoin developments and other crypto trends? Visit Bittime Blogfor the latest news or start trading right away Bittime Exchange.

FAQ

What is USDH?

USDH is a new stablecoin developed by Hyperliquid to reduce dependence on USDC and USDT.

Why is USDH important to Hyperliquid?

USDH makes Hyperliquid more independent in managing liquidity and can provide additional benefits to its ecosystem.

Who wants to issue USDH?

Several organisations, such as Paxos, Frax Finance, Agora, and Native Markets, have already submitted formal proposals.

What are the benefits of USDH for users?

USDH has the potential to provide better rewards, increase staking HYPE, and expand stablecoin options for traders.

Will USDH be more stable than other stablecoins?

The stability of USDH will depend heavily on the chosen issuer and the reserve asset used.