The bidding event for Hyperliquid’s USDH stablecoin has revealed potential shifts in the rules of the stablecoin market. On the surface, it appears to be a battle of interests among issuers like Frax and Sky, but in reality, it is an "open auction" for the right to mint currency, exposing the fundamental conflict between the demand for native stablecoins in decentralized applications and the need for unified liquidity.

Fragmented Liquidity and Contradictions in Solutions
Every major protocol seeks its own "right to print money," but this inevitably leads to fragmented liquidity. Two proposed solutions—unifying stablecoins and sharing profits, or building a unified liquidity layer—struggle to achieve self-consistency due to issues of profit distribution.

Return of Profit Rights to Value Creators
Traditional issuers like Circle and Tether act as intermediaries, earning returns from reserve assets, but the real value is created by protocols processing transactions. The USDH bidding challenges this model, advocating that profits should be allocated to applications that control genuine transaction demand and user traffic.

Endgame Possibility: Application Chains Dominate Discourse
Application chains generate primary revenue through transaction fees, making profits from stablecoin issuance secondary. Bidders like Frax and Sky promise high returns or buybacks, indicating that competition among issuers is forcing changes to traditional rules, potentially reducing issuers to "backend service providers."

Regulation and Future Outlook
Clearer regulations may accelerate the transfer of profit rights, but unifying minting rights under regulators or decentralized protocols remains a distant future. The core significance of the bidding event lies in ending the era of "easy wins" for old issuers and推动ing profit rights back to value creators.

Summary
Let’s talk about the much-hyped bidding event for Hyperliquid’s $USDH stablecoin.

On the surface, it seems like a battle of interests among issuers such as Frax, Sky, and Native Market, but in reality, it is an "open auction" for the right to mint stablecoins, which could change the rules of the stablecoin market.

Building on @0xMert_’s insights, here are a few key points:

1. The USDH minting rights competition exposes the fundamental矛盾 between decentralized applications’ demand for native stablecoins and the need for unified liquidity.
   Simply put, every major protocol wants its own "right to print money," but this inevitably fragments liquidity.

Mert proposed two solutions to this problem:

• "Align" ecosystem stablecoins: Everyone agrees to use a single stablecoin and share profits proportionally. But here’s the issue: If USDC or USDT is the consensus choice, would they be willing to share a significant portion of their profits with DApps?

• Build a stablecoin liquidity layer (M0 model): Use a crypto-native approach to create a unified liquidity layer, such as Ethereum as an interoperable layer, allowing various native stablecoins to be swapped seamlessly. However, who bears the operational costs of this layer? Who ensures the peg of different stablecoins? How are systemic risks from depegging events resolved?

These solutions seem reasonable but only address liquidity fragmentation. When considering each issuer’s interests, the logic falls apart.

Circle earns billions annually from 5.5% Treasury yields—why would they share with protocols like Hyperliquid? In other words, when Hyperliquid has the capability to break away from traditional issuers and issue its own stablecoin, Circle’s "easy win" model is challenged.

The USDH bidding event can be seen as a demonstration against the "hegemony" of traditional stablecoin issuance. Whether this rebellion succeeds or fails is less important than the fact that it happened.

1. Why? Because profit rights will ultimately return to value creators.
   The traditional stablecoin issuance model involves intermediaries like Circle and Tether. Users deposit funds, which are used to buy Treasuries or earn fixed interest on platforms like Coinbase, but most profits are kept by the issuers.

The USDH event highlights a flaw in this logic: The real value is created by protocols processing transactions, not by issuers merely holding reserve assets. From Hyperliquid’s perspective, with daily transaction volumes exceeding $5 billion, why should they let Circle keep the annualized $200 million+ Treasury yields?

In the past, the primary concern for stablecoin circulation was "safety and maintaining the peg," so issuers like Circle, who incur significant "compliance costs," deserved these profits.

However, as the stablecoin market matures and regulations become clearer, profit rights are likely to shift toward value creators.

Thus, the significance of the USDH bidding lies in defining a new rule for stablecoin profit distribution: Those who control genuine transaction demand and user traffic should优先享有 profit rights.

1. So, what will the endgame look like? Application chains dominate discourse, and issuers become "backend service providers"?
   Mert’s third solution is intriguing: Let application chains generate revenue, while traditional issuers’ profits tend toward zero. How can we understand this?

Consider that Hyperliquid generates hundreds of millions in annual transaction fees alone. In comparison, the potential Treasury yields from managing reserves, while stable, become "nice to have" rather than essential.

This explains why Hyperliquid chose to transfer issuance rights rather than issue its own stablecoin: The profits from issuance are far less attractive than expanding transaction volume and fees.

In fact, the reactions of bidders confirm this: Frax承诺ed to return 100% of profits to Hyperliquid for HYPE buybacks; Sky offered a 4.85% yield plus a $250 million annual buyback; Native Markets proposed a 50/50 split, etc.

Essentially, the battle for interests between DApps and stablecoin issuers has evolved into a game of "internal competition" among issuers, with new issuers forcing old ones to change the rules.

As for Mert’s fourth solution, it sounds abstract. If it materializes, the brand value of stablecoin issuers might be reduced to zero, or minting rights could be unified under regulators or some decentralized protocol. This remains unknown and likely belongs to a distant future.

In any case, the USDH bidding war, in my view, is significant for宣告ing the end of the "easy win" era for old issuers and guiding stablecoin profit rights back to value-creating "applications."

As for whether it’s "bribery" or if the bidding is transparent, I believe that’s a window of opportunity before regulations like the GENIUS Act are fully implemented. It’s enough to enjoy the spectacle.

The bidding event for Hyperliquid’s USDH stablecoin has revealed potential shifts in the rules of the stablecoin market. On the surface, it appears to be a battle of interests among issuers like Frax and Sky, but in reality, it is an "open auction" for the right to mint currency, exposing the fundamental conflict between the demand for native stablecoins in decentralized applications and the need for unified liquidity.

Fragmented Liquidity and Contradictions in Solutions
Every major protocol seeks its own "right to print money," but this inevitably leads to fragmented liquidity. Two proposed solutions—unifying stablecoins and sharing profits, or building a unified liquidity layer—struggle to achieve self-consistency due to issues of profit distribution.

Return of Profit Rights to Value Creators
Traditional issuers like Circle and Tether act as intermediaries, earning returns from reserve assets, but the real value is created by protocols processing transactions. The USDH bidding challenges this model, advocating that profits should be allocated to applications that control genuine transaction demand and user traffic.

Endgame Possibility: Application Chains Dominate Discourse
Application chains generate primary revenue through transaction fees, making profits from stablecoin issuance secondary. Bidders like Frax and Sky promise high returns or buybacks, indicating that competition among issuers is forcing changes to traditional rules, potentially reducing issuers to "backend service providers."

Regulation and Future Outlook
Clearer regulations may accelerate the transfer of profit rights, but unifying minting rights under regulators or decentralized protocols remains a distant future. The core significance of the bidding event lies in ending the era of "easy wins" for old issuers and推动ing profit rights back to value creators.

Summary
Let’s talk about the much-hyped bidding event for Hyperliquid’s $USDH stablecoin.

On the surface, it seems like a battle of interests among issuers such as Frax, Sky, and Native Market, but in reality, it is an "open auction" for the right to mint stablecoins, which could change the rules of the stablecoin market.

Building on @0xMert_’s insights, here are a few key points:

1. The USDH minting rights competition exposes the fundamental矛盾 between decentralized applications’ demand for native stablecoins and the need for unified liquidity.
   Simply put, every major protocol wants its own "right to print money," but this inevitably fragments liquidity.

Mert proposed two solutions to this problem:

• "Align" ecosystem stablecoins: Everyone agrees to use a single stablecoin and share profits proportionally. But here’s the issue: If USDC or USDT is the consensus choice, would they be willing to share a significant portion of their profits with DApps?

• Build a stablecoin liquidity layer (M0 model): Use a crypto-native approach to create a unified liquidity layer, such as Ethereum as an interoperable layer, allowing various native stablecoins to be swapped seamlessly. However, who bears the operational costs of this layer? Who ensures the peg of different stablecoins? How are systemic risks from depegging events resolved?

These solutions seem reasonable but only address liquidity fragmentation. When considering each issuer’s interests, the logic falls apart.

Circle earns billions annually from 5.5% Treasury yields—why would they share with protocols like Hyperliquid? In other words, when Hyperliquid has the capability to break away from traditional issuers and issue its own stablecoin, Circle’s "easy win" model is challenged.

The USDH bidding event can be seen as a demonstration against the "hegemony" of traditional stablecoin issuance. Whether this rebellion succeeds or fails is less important than the fact that it happened.

1. Why? Because profit rights will ultimately return to value creators.
   The traditional stablecoin issuance model involves intermediaries like Circle and Tether. Users deposit funds, which are used to buy Treasuries or earn fixed interest on platforms like Coinbase, but most profits are kept by the issuers.

The USDH event highlights a flaw in this logic: The real value is created by protocols processing transactions, not by issuers merely holding reserve assets. From Hyperliquid’s perspective, with daily transaction volumes exceeding $5 billion, why should they let Circle keep the annualized $200 million+ Treasury yields?

In the past, the primary concern for stablecoin circulation was "safety and maintaining the peg," so issuers like Circle, who incur significant "compliance costs," deserved these profits.

However, as the stablecoin market matures and regulations become clearer, profit rights are likely to shift toward value creators.

Thus, the significance of the USDH bidding lies in defining a new rule for stablecoin profit distribution: Those who control genuine transaction demand and user traffic should优先享有 profit rights.

1. So, what will the endgame look like? Application chains dominate discourse, and issuers become "backend service providers"?
   Mert’s third solution is intriguing: Let application chains generate revenue, while traditional issuers’ profits tend toward zero. How can we understand this?

Consider that Hyperliquid generates hundreds of millions in annual transaction fees alone. In comparison, the potential Treasury yields from managing reserves, while stable, become "nice to have" rather than essential.

This explains why Hyperliquid chose to transfer issuance rights rather than issue its own stablecoin: The profits from issuance are far less attractive than expanding transaction volume and fees.

In fact, the reactions of bidders confirm this: Frax承诺ed to return 100% of profits to Hyperliquid for HYPE buybacks; Sky offered a 4.85% yield plus a $250 million annual buyback; Native Markets proposed a 50/50 split, etc.

Essentially, the battle for interests between DApps and stablecoin issuers has evolved into a game of "internal competition" among issuers, with new issuers forcing old ones to change the rules.

As for Mert’s fourth solution, it sounds abstract. If it materializes, the brand value of stablecoin issuers might be reduced to zero, or minting rights could be unified under regulators or some decentralized protocol. This remains unknown and likely belongs to a distant future.

In any case, the USDH bidding war, in my view, is significant for宣告ing the end of the "easy win" era for old issuers and guiding stablecoin profit rights back to value-creating "applications."

As for whether it’s "bribery" or if the bidding is transparent, I believe that’s a window of opportunity before regulations like the GENIUS Act are fully implemented. It’s enough to enjoy the spectacle.