Hyperliquid's $200 Million Annual Yield Potential Ignites Fierce Bidding War for USDH Stablecoin

A competitive landscape is emerging within the cryptocurrency market, highlighted by a fierce bidding war for Hyperliquid's new native stablecoin, USDH, alongside Tether's clarification regarding its Bitcoin holdings and the shutdown of DeFi project Kinto. These developments were recently reported by Laura Shin in her Unchained Daily newsletter. The Hyperliquid ecosystem, with its significant trading volume, is at the center of a high-stakes competition among stablecoin issuers.

Hyperliquid, a decentralized perpetuals exchange commanding a substantial share of the derivatives trading volume, is seeking an issuer for its new yield-bearing stablecoin, USDH. This move aims to capture the estimated $200 million in annual interest income currently flowing to external stablecoin providers like USDC. Major players such as Paxos, Frax Finance, and Agora have submitted proposals, each vying for the right to manage USDH and its underlying reserves.

Paxos has proposed returning 95% of the income from USDH reserves to the Hyperliquid community through HYPE token buybacks, emphasizing compliance with US GENIUS and EU MiCA regulations. In contrast, Frax Finance offers to return 100% of the yield to Hyperliquid users, backing USDH with its yield-bearing frxUSD. Circle CEO Jeremy Allaire has also indicated plans to launch a native USDC within the Hyperliquid ecosystem to defend its market position.

Meanwhile, Tether, the issuer of the world's largest stablecoin USDT, has quashed rumors of a significant Bitcoin (BTC) selloff. Speculation arose from a perceived drop in BTC holdings in Q2 2025, as noted in BDO attestation data. However, CEO Paolo Ardoino and Jan3 CEO Samson Mow clarified that approximately 19,800 BTC were transferred to Twenty One Capital (XXI), an investment initiative, rather than being sold.

In a separate development, the Ethereum Layer-2 project Kinto has announced its shutdown following a July exploit that drained 577 ETH, valued at approximately $1.6 million at the time. The exploit, coupled with a subsequent $1 million debt burden and worsening market conditions, made further fundraising impossible for the protocol. Kinto has advised users to withdraw assets by September 30, with efforts underway to reimburse affected users and lenders.