Ethena Labs Exits Hyperliquid USDH Bid Amid Community Pushback
Ethena Labs has withdrawn from the competition to issue USDH, the native stablecoin of the Hyperliquid ecosystem, following criticism from Block confirmers and community members who questioned the firm’s suitability for the role.
The move marks a significant shift in the race to manage USDH, as Native Markets emerges as the leading contender ahead of the final vote scheduled for September 14. Ethena’s decision comes amid heightened scrutiny over the responsibilities tied to issuing Hyperliquid’s primary stablecoin, which is viewn as central to the platform’s growth and adoption.
Community concerns centered on Ethena’s broad product portfolio beyond USDH and Hyperliquid. Critics argued that the company, best known for its synthetic dollar USDe, was not fully aligned with the Hyperliquid ecosystem. Questions were raised about whether its focus would be divided across multiple initiatives rather than dedicated to USDH. Some Block confirmers emphasized the importance of having a native-first approach, suggesting that Ethena’s global ambitions and external projects could limit its ability to serve Hyperliquid’s unique needs.
Ethena founder Guy Young acknowledged the criticism and emphasized the decision was made to respect community sentiment rather than escalate tensions. “We felt it was significant to listen and step aside, allowing the ecosystem to move forward with unity,” Young said. He added that while Ethena believed in its ability to deliver a robust stablecoin, the company recognized that community support was paramount in determining the right issuer for USDH.
Native Markets positioned as frontrunner
With Ethena stepping aside, Native Markets has gained traction as the preferred choice to issue USDH. Prediction platforms such as Polymarket have shown a sharp swing in favor of Native Markets, reflecting market confidence in its prospects ahead of the upcoming community vote. The firm has marketed itself as deeply aligned with Hyperliquid’s long-term goals, positioning its strategy around ecosystem-first priorities.
The withdrawal also caused short-term ripples in the market. Ethena’s native token ENA fell by roughly 3% following the announcement, as investors recalibrated expectations around the company’s near-term prospects. Analysts noted, however, that Ethena’s broader product pipeline remains intact, limiting the long-term impact of its exit from the USDH race.
Ethena’s roadmap beyond USDH
Despite withdrawing from the USDH contest, Ethena Labs reiterated its commitment to building within Hyperliquid. The company outlined plans to develop synthetic dollar products such as hUSDe, as well as USDe-powered savings tools, card products, and hedging mechanisms designed to support Hyperliquid’s liquidity. These initiatives are expected to complement the ecosystem regardless of which firm is chosen to issue USDH.
Additionally, Ethena indicated interest in exploring opportunities through Hyperliquid’s HIP-3 program, which opens pathways for ecosystem-native initiatives including reward-bearing collateral, modular prime broking, and structured products. By continuing to contribute in these areas, Ethena aims to demonstrate that its ambitions can still align with Hyperliquid’s growth, even without the direct responsibility of managing USDH.
The final decision on USDH’s issuer remains pending, but Ethena’s exit reshapes the competitive field. The spotlight is now firmly on Native Markets, with the upcoming vote expected to define a pivotal chapter for Hyperliquid’s stablecoin ambitions. Observers note that the outcome will not only determine the issuer of USDH but also signal the community’s broader priorities in balancing innovation with ecosystem alignment.
At a time when stablecoins remain a cornerstone of DeFi infrastructure, the decision carries implications beyond Hyperliquid. Ethena’s withdrawal underscores the challenges of balancing multi-ecosystem expansion with community expectations, while Native Markets’ rise reflects the growing importance of ecosystem-first models in defining the future of decentralized finance.
