Decentralized exchange and layer-1 chain Hyperliquid’s plan to launch a proprietary stablecoin, USDH, has turned into one of the most contentious governance battles of recent years in crypto.

At stake is control of a dollar-pegged token that could replace the $5.5 billion of USDC, which currently represents 95% of the platform’s stablecoin supply, and generate hundreds of millions in revenue from yields on U.S. Treasuries. The validator vote on Sept. 14 will decide who issues USDH.

The contest has attracted heavyweight bidders, including Paxos, Frax as well as a coalition involving Agora and MoonPay, but the fiercest debate is over a proposal tied to Stripe’s Bridge platform.

Some members of the community are warning that handing control of the exchange’s monetary layer to Stripe, which is building its own blockchain called Tempo and already controls wallet infrastructure through its Privy acquisition, would amount to ceding economic sovereignty to a competitor.

“If Hyperliquid relinquishes their canonical stablecoin to Stripe, a vertically integrated issuer with clear conflicts, what are we even doing?” Nick van Eck, CEO and co-founder of Agora, which has a proposal in front of voters, wrote.

In announcing its participation in the Agora coalition, MoonPay President Keith Grossman stressed that his payment processor holds more licenses and verified users than Stripe or Bridge, saying “USDH deserves scale, credibility and alignment – not BS capture.”

Crowded field

Paxos has pitched 95% of reserve earnings into HYPE token buybacks, leaning on its decade-long track record as a regulated issuer. Frax offered a “community-first” model, passing through 100% of Treasury yield to users with zero take.

Agora’s bid emphasized neutrality and alignment, promising 100% of net revenue for HYPE buybacks or Hyperliquid’s Assistance Fund.

With Ethena hinting it may enter the race, the lineup of bidders could expand, adding another layer of complexity to an already crowded field.

Each proposal offers a different vision for how USDH should function: From Paxos’ regulatory-first approach to Frax’s user-yield model to Agora’s Hyper-native coalition backed by institutional custodians and consumer-facing payment rails.

Hyperliquid dominates the DeFi derivatives market, with nearly an 80% market share. Given the growth of the Hyperliquid ecosystem, the right to issue its native stablecoin would be incredibly lucrative for whoever is awarded the contract.

Hyperliquid set Sept. 10 as the deadline for proposals — more are expected in the next 48 hours — and Sept. 14 as the date for the validator vote. The Hyperliquid Foundation also said that it will “effectively abstain,” leaving the decision to validators.