TLDR
- Sky Protocol is the fifth major bidder for Hyperliquid’s USDH stablecoin.
- The proposal promises 4.85% yield on all USDH held on Hyperliquid.
- Sky commits $25 million to fund Hyperliquid ecosystem development.
- Proposal includes multichain deployment and GENIUS Act compliance options.
Sky Protocol has entered the competition to issue Hyperliquid’s USDH stablecoin, becoming the fifth major bidder. The protocol proposes a 4.85% yield on USDH deposits and pledges $25 million for ecosystem growth.
Co-founder Rune Christensen submitted the proposal, highlighting access to $2.2 billion in instant USDC liquidity through infrastructure backing $8 billion in USDS and DAI stablecoins. Sky’s bid offers customization, GENIUS Act compliance, and multichain deployment via LayerZero.
Competition and Community Response
Hyperliquid opened a call for proposals for a “Hyperliquid-first” stablecoin last Friday. Native Markets initially proposed partnering with Stripe’s Bridge for issuance.
The proposal faced opposition from Agora CEO Nick Van Eck, citing potential conflicts of interest and migration risks from Hyperliquid. MoonPay joined the coalition against Stripe, with Dragonfly partner Rob Hadick supporting the move as strengthening the bid.
Van Eck appealed to the Hyperliquid community, emphasizing long-term support and token holdings, while Paxos and Frax Protocol also submitted proposals with different yield and buyback strategies.
Sky’s Proposal and Technical Advantages
Sky emphasizes a seven-year track record managing over $8 billion in USDS and DAI without losses. The protocol offers 4.85% returns on all USDH deposits, exceeding U.S. Treasury bill rates.
The system uses technical architecture similar to DAI and USDS, granting immediate access to Peg Stability Module liquidity totaling $2.2 billion in USDC. Sky also plans off-chain redemptions via spark.fi, sky.money, and defisaver.com, and allows native conversion between USDH and sUSDS.
Multichain deployment through LayerZero allows Sky to deploy its $8 billion collateral portfolio on Hyperliquid efficiently, while minimizing risk. The protocol also commits $25 million for Hyperliquid Genesis Star, an autonomous project to grow the DeFi ecosystem.
Hyperliquid Growth and Market Performance
Hyperliquid’s August revenue reached $106 million from perpetual futures trading, capturing 70% of DeFi perpetuals market share. Daily trading volumes peaked at $29 billion, generating $7.7 million in fees.
Total value locked increased from $230.48 million in April to $762.57 million, while HYPE token maintains strong performance near $47, gaining over 400% since April. Institutional adoption continues through Anchorage Digital custody and Circle’s USDC deployment.
Sky’s commitment to the Hyperliquid ecosystem extends beyond the USDH vote. Christensen stated, “By using Sky to power USDH, the Hyperliquid community will gain advantages no other stablecoin project can offer.”
Hyperliquid validators will vote on the winning proposal following the network’s next upgrade, which is yet to be announced.
