Frax founder Sam Kazemian emphasizes interoperability and economic integration as key differentiators in the competition for Hyperliquid's USDH stablecoin contract, prioritizing these aspects over treasury yield offerings.

Executive Summary

Sam Kazemian, founder of Frax Finance, articulated the importance of interoperability and deep economic integration for stablecoin issuers in light of the bidding process for Hyperliquid's new stablecoin, USDH. This statement highlights a strategic shift towards valuing stablecoin utility and network effects over solely pursuing high treasury yields.

The Event in Detail

Hyperliquid is seeking a new USD stablecoin, USDH, and has invited proposals from various stablecoin issuers. Frax, along with Paxos and Agora, have submitted bids. Kazemian's remarks, made on social media, underscore his belief that the true value of stablecoin issuers lies in their ability to foster interoperability and integrate deeply into the economic distribution chain. Frax's proposal includes forwarding 100% of the underlying Treasury yield programmatically on-chain to Hyperliquid users with zero Frax take rate.

Market Implications

Kazemian's emphasis on interoperability signals a potential shift in stablecoin valuation metrics. Instead of focusing solely on yield, stablecoin issuers may increasingly prioritize features that enhance usability across different blockchain ecosystems. This aligns with the growing importance of multi-chain stablecoins, which offer users flexibility by allowing them to transact across various blockchain networks. The outcome of the bidding war for Hyperliquid's USDH could influence the strategies of other stablecoin issuers and decentralized exchanges (DEXs).

Expert Commentary

"FRA is bringing the original Libra vision back to life with FRA and the full full money stack," stated Sam Kazemian at TOKEN2049 Dubai 2025, highlighting the broader vision for Frax beyond just a stablecoin.

Frax's focus on interoperability also includes plans to enable users to connect their Web3 wallets and transfer FRAUSD stablecoins into any of their web3 wallet addresses in any of the 15 chains where FRAUSD is already issued.

Broader Context

The competition for Hyperliquid's USDH reflects the broader trend of DEXs seeking greater financial independence and control over their liquidity. By launching USDH, Hyperliquid aims to reduce its reliance on USDC. If USDH captures even 15% of Hyperliquid's stablecoin liquidity, it could displace $5.5 billion in USDC deposits.