Paxos Designs Tailored Stablecoin to Fuel Hyperliquid’s Growth Engine

Paxos, a leading stablecoin infrastructure provider, has unveiled a proposal to launch USDH, a stablecoin specifically designed for the Hyperliquid ecosystem, with full compliance with the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) and Markets in Crypto-Assets (MiCA) regulatory standards. The proposal, announced on Saturday, outlines a mechanism where 95% of the interest earned from USDH reserves will be allocated toward buying back Hyperliquid’s native token, HYPE. These repurchased tokens will then be redistributed to users, validators, and partner protocols, creating a feedback loop of value within the ecosystem [1].

The initiative is being led by Paxos Labs, a new entity within Paxos that recently acquired infrastructure firm Molecular Labs—the developer of Hyperliquid’s primitives LHYPE and WHLP. This strategic acquisition enhances Paxos’s understanding of Hyperliquid’s onchain financial architecture and positions the company to build a stablecoin tailored to the platform’s needs [1].

USDH will be deployed across both HyperEVM and HyperCore chains, two foundational components of the Hyperliquid infrastructure. The stablecoin is intended to bridge the Hyperliquid ecosystem to traditional institutions and mainstream fintech platforms by linking it to global banking rails and offering a layer of regulatory clarity. This is expected to enhance the platform’s appeal to institutional investors and broader financial services companies [1].

Paxos, already connected to over 70 financial partners and active in key markets such as the United States, European Union, Singapore, Abu Dhabi, and Latin America, plans to leverage its existing infrastructure to distribute USDH widely. The proposal also introduces a built-in rewards mechanism, where the majority of yield generated from USDH reserves is directed toward HYPE buybacks. These repurchases are intended to channel value back to the Hyperliquid ecosystem, including direct distributions to builders, validators, and users [1].

Hyperliquid has already established itself as a dominant player in the decentralized perpetual futures market. In the most recent month, the platform generated over $106 million in revenue on nearly $400 billion in trading volume. This performance has given Hyperliquid a market share of approximately 70% in the sector, with only Uniswap and PancakeSwap surpassing it in weekly trading volume, according to data from DefiLlama [1]. The introduction of USDH is expected to further solidify Hyperliquid’s position in the space by providing a stablecoin with tailored incentives that align with its growth objectives.

Beyond the stablecoin initiative, Paxos has also announced plans to integrate HYPE into its broader brokerage infrastructure, which currently supports crypto services for major platforms such as PayPal, Venmo, and MercadoLibre. This move could expand the utility of HYPE beyond the Hyperliquid ecosystem and into broader financial services, potentially increasing its adoption and liquidity. The integration is part of a broader strategy to strengthen the Hyperliquid platform’s institutional and user-facing appeal.

Source: [1] Paxos Proposes Stablecoin for Hyperliquid with HYPE (https://cointelegraph.com/news/paxos-proposes-usdh-stablecoin-for-hyperliquid)