Eterna Labs Pulls Out of USDH Issuer Race Amid Community Pressure

Eterna Labs has officially withdrawn from the race to become the issuer of the USDH stablecoin within the Hyperliquid (HYPE) ecosystem. This decision arrives amidst mounting community concerns and validator feedback, which indicate a clear preference for Native Markets. Traders on Polymarket have heavily predicted Native Markets' victory, assigning a 91% likelihood to the outcome.

Eterna Labs Withdraws Following Community Feedback

On September 12, Eterna Labs announced its withdrawal via X (formerly Twitter), citing feedback from both the community and validators. Concerns primarily revolved around Eterna Labs not being a native project within the Hyperliquid ecosystem—a cornerstone issue for a platform aiming to launch a pivotal stablecoin. Additionally, its pursuit of broader business ambitions beyond the issuance of USDH added to the skepticism among ecosystem participants.

In its official statement, Eterna Labs underscored its commitment to community-led initiatives, describing the selection process as “an equal playing field where trust is earned through grassroots support rather than size, experience, or resources.” While stepping out of the running for USDH issuance, the company reaffirmed its long-term goals within Hyperliquid. Eterna Labs plans to develop new financial products in line with its broader vision, including synthetic dollar options like hUSDe, deposits pegged to USDe, and card payment solutions tailored to the ecosystem.

Native Markets Leads the USDH Stablecoin Issuer Race

Native Markets has emerged as the frontrunner to secure the USDH issuance role, as indicated by strong community backing and a compelling prediction market on Polymarket showing a 91% probability of victory. The Hyperliquid Foundation has committed to a non-interventionist stance in the voting process, reiterating its support will go to the team demonstrating the highest level of community trust and endorsement.

At stake for the winner is the management of a $5.9 billion reserve (KRW 8.2 trillion), currently anchored by stablecoin pairs such as USDC. This role is expected to significantly shape the next chapter of the Hyperliquid ecosystem. Further bolstering credibility for USDH, Kraken has announced plans to list the stablecoin and HYPE tokens following the vote—a move projected to enhance institutional adoption and increase overall cryptocurrency market awareness.

Competitors and Broader Market Dynamics

The race for USDH issuance also includes notable competitors like Paxos, Frax, and Agora, adding depth to what has become a closely watched strategic pivot for Hyperliquid. Industry leader Arthur Hayes has notably amplified his interest in the competition by acquiring additional ENA tokens, signaling his bullish stance as the ecosystem approaches this critical crossroads.

With the pivotal vote scheduled for September 14, Native Markets’ commanding position reflects the growing alignment within the community and hints at the trajectory Hyperliquid is likely to adopt. The outcome of this selection process will invariably set precedents for future decisions central to the ecosystem’s evolution.