Hyperliquid's USDH Stablecoin Issuance Rights Attract Institutional Bidders

Several institutions, including Paxos and Frax, are bidding for the issuance rights of Hyperliquid's USDH stablecoin. Paxos proposed compliance with MiCA and GENIUS acts, native deployment on HyperEVM and HyperCore, and using 95% of interest income for HYPE token buyback. Frax proposed pegging USDH to frxUSD at a 1:1 ratio, with 100% of underlying bond yield distributed to Hyperliquid users. Agora also assembled a joint bidding team, promising to allocate 100% of net revenue to Hyperliquid. Voting for the winner will take place on September 14th.

In a significant development for the cryptocurrency and DeFi sectors, several major players are vying for the rights to issue Hyperliquid's USDH stablecoin. The competition underscores the growing importance of stablecoins in the digital asset ecosystem and the potential for these tokens to drive mainstream adoption.

Paxos' Proposal

Paxos, a well-established blockchain infrastructure provider, has submitted a proposal to issue USDH for Hyperliquid. The company has highlighted its extensive experience in stablecoin issuance, having issued regulated stablecoins for over seven years. Paxos' proposal emphasizes compliance with the GENIUS Act in the United States and MiCA compliance across Europe. The USDH stablecoin will be backed by high-quality reserves such as US Treasuries, repos, and USDG tokens, and it will be deployed natively on both HyperEVM and HyperCore blockchains.

A key feature of Paxos' proposal is the revenue-sharing model, which allocates 95% of interest earnings from reserves toward HYPE token buybacks. This model aims to create aligned incentives for application builders, validators, and community members. The stablecoin will also support comprehensive funding capabilities, including direct fiat banking rails through SWIFT, ACH, and wire transfers. Paxos plans to integrate HYPE as a tradeable asset within its brokerage infrastructure, providing additional liquidity and institutional access for the governance token [1].

Frax Finance's Proposal

Frax Finance has also submitted a proposal for USDH issuance, positioning its approach as entirely community-driven. Frax's proposal pegs USDH to its own frxUSD at a 1:1 ratio and will be backed by US Treasury securities managed by asset managers like BlackRock. Unlike Paxos, Frax is committed to distributing the full yield from those treasuries directly to Hyperliquid users through on-chain mechanisms. Frax's proposal also emphasizes cross-chain functionality, leveraging its existing multichain infrastructure to connect more than 20 networks. This framework would give USDH native functionality while keeping the stablecoin within the Hyperliquid ecosystem [2].

Agora's Proposal

Agora, a joint bidding team, has assembled a proposal that promises to allocate 100% of net revenue to Hyperliquid. The specifics of Agora's proposal are not as detailed as those of Paxos and Frax, but the team's focus on revenue sharing is a notable feature. The voting process for the winning proposal will take place on September 14th, with the outcome potentially shaping the future of stablecoins in the Hyperliquid ecosystem.

Conclusion

The competition for Hyperliquid's USDH stablecoin issuance rights highlights the growing importance of stablecoins in the digital asset ecosystem. Each proposal offers unique features and benefits, with Paxos emphasizing regulatory compliance and institutional reach, Frax focusing on community-driven yield distribution, and Agora promising significant revenue sharing. The winner of the competition will likely be determined by a combination of technical capabilities, regulatory compliance, and community support.

References

[1] https://cryptonews.com/news/paxos-proposes-to-issue-usdh-stablecoin-for-hyperliquid-with-95-revenue-share-to-hype-buyback/
[2] https://www.btcc.com/en-AU/square/Beincrypto/915963