Let's talk about the highly publicized bidding event of Hyperliquid's $USDH stablecoin.
On the surface, it seems to be a battle for interests among several issuers such as Frax, Sky, and Native Market, but in reality, it is a 'public auction' for stablecoin minting rights, which will change the rules of the game in the subsequent stablecoin market.
Combining the thoughts of @0xMert_, I will share a few viewpoints:
1) The competition for USDH minting rights exposes a fundamental contradiction between the demand for native stablecoins in decentralized applications and the unified liquidity demand for stablecoins.
In simple terms, every mainstream protocol tries to have its own 'printing power', but this inevitably leads to liquidity being fragmented.
In response to this issue, Mert proposed two solutions:
1. 'Aligning' the ecosystem of stablecoins, where everyone agrees to use a common stablecoin and share profits proportionally. The question arises: assuming the current USDC or USDT is the most consensus-driven aligning stablecoin, are they willing to share a large portion of their profits with DApps?
2. Build a liquidity layer for stablecoins (M0 model) using Crypto Native thinking to create a unified liquidity layer, such as Ethereum as an interactive operational layer, allowing various native stablecoins to be seamlessly exchanged. However, who will bear the operational costs of the liquidity layer, and who will ensure the structural anchoring of different stablecoins? How can the systemic risks caused by individual stablecoins decoupling be resolved?
These two plans seem reasonable, but they can only solve the problem of liquidity fragmentation, because once the interests of each issuance are considered, the logic becomes self-inconsistent.
Circle relies on a 5.5% government bond return to effortlessly earn billions every year; why should they share with an agreement like Hyperliquid? In other words, when Hyperliquid qualifies to sever ties with traditional issuers and establish itself, the 'lying win' model of issuers like Circle will also face challenges.
The USDH bidding event can be seen as a demonstration against the 'hegemony' of traditional stablecoin issuance? In my view, whether the rebellion succeeds or fails is not important; what matters is the moment of uprising.
2) Why do I say this? Because the rights to stablecoin profits will ultimately return to the hands of value creators.
The traditional stablecoin issuance model, such as that of Circle and Tether, essentially operates as intermediaries; users deposit funds, which they use to purchase government bonds or deposit in Coinbase to earn fixed lending interest, but most of the benefits are kept for themselves.
Clearly, the USDH event aims to tell them that this logic has a bug: what truly creates value is the protocol that processes transactions, not merely the issuers who hold reserve assets. From Hyperliquid's perspective, processing over $5 billion in transactions daily, why should they give up more than $200 million in annual government bond returns to Circle?
In the past, the first demand for stablecoin circulation was 'safety without decoupling', thus issuers like Circle, who spend a lot on 'compliance costs', should rightfully enjoy this part of the profits.
However, as the stablecoin market matures, the increasingly clear regulatory environment will tend to shift this part of the profit rights back to the value creators.
So, in my opinion, the significance of the USDH bidding lies in defining a brand new distribution rule for stablecoin value returns: whoever holds real trading demand and user traffic will have priority in profit distribution rights;
3) So what will the endgame be: will the application chain dominate the discourse, and the issuers be reduced to 'back-end service providers'?
Mert mentioned that the third plan is quite interesting; let the application chain generate income while the profits of traditional issuers approach zero? How should this be understood?
Imagine that Hyperliquid can generate hundreds of millions in revenue just from transaction fees in a year; in contrast, the potential government bond returns from managing reserves, while stable, have become 'optional'.
This explains why Hyperliquid chooses to transfer the issuance rights rather than lead the issuance itself; because there is no need, self-issuing would increase 'credit liabilities', and the profits gained are far less enticing than the transaction fees from increasing trade volumes.
In fact, look, when Hyperliquid transferred the issuance rights, the bidders' reactions were enough to prove everything: Frax promised to return 100% of the profits to Hyperliquid for HYPE buybacks; Sky offered a 4.85% yield plus a $250 million annual buyback chip; Native Markets proposed a 50/50 profit-sharing, etc.;
Essentially, the original battle for interests between DApps and stablecoin issuers has already evolved into an 'involution' game among the three issuing parties, especially with new issuers forcing old issuers to change the rules.
That's it.
Mert's fourth plan sounds a bit abstract; when it comes to that point, the brand value of stablecoin issuers may completely plummet, or the right to issue coins may be fully unified under supervision, or it could be a form of decentralized protocol; it remains uncertain. That should still belong to a distant future.
In short, in my opinion, this chaotic bidding for USDH can declare the end of the era where old stablecoin issuers lie back and win; truly guiding the rights to stablecoin returns back to the 'applications' that create value is already extraordinarily significant!
As for whether it is 'bribery', and whether the bidding is transparent, I think that is actually a window of opportunity before regulatory schemes like the GENIUS Act are truly implemented; just watching the excitement is enough.
