Paxos Engineers Institutional Bridge for Hyperliquid with USDH

Paxos has proposed USDH, a Hyperliquid-first stablecoin designed to align incentives and drive growth within the decentralized exchange ecosystem. Fully compliant with the U.S. GENIUS Act and the European MiCA regulatory standards, the stablecoin will be backed by reserves and is intended to bridge Hyperliquid to global institutional finance platforms. The proposal outlines that 95% of interest earned from USDH reserves will be allocated to buybacks of Hyperliquid’s native token, HYPE, with the tokens redistributed to users, validators, and partner protocols. This mechanism aims to reinforce the Hyperliquid ecosystem by recycling value back into its core components [1].

Paxos Labs, a newly established entity within the Paxos organization, will lead the initiative. The company recently acquired Molecular Labs, a key infrastructure provider for Hyperliquid, enhancing its technical understanding of the platform’s architecture. Molecular Labs is responsible for developing LHYPE and WHLP, integral components of Hyperliquid’s on-chain financial infrastructure. This acquisition positions Paxos with firsthand experience in the Hyperliquid ecosystem, complemented by its decade-long expertise in stablecoin issuance for major platforms like Binance, PayPal, and OKX [2].

USDH is planned for deployment on both the HyperEVM and HyperCore blockchains, which will provide native integration with Hyperliquid’s trading infrastructure. The stablecoin will hold reserves in U.S. Treasury bills, repurchase agreements, and USDG tokens, meeting the liquidity requirements of institutional market makers. Paxos aims to leverage its existing infrastructure, including banking licenses in Singapore and Abu Dhabi and operational presence in markets such as Brazil, Mexico, and the UAE, to facilitate USDH’s global distribution. The company is already integrated with over 70 financial partners across multiple jurisdictions [1].

Hyperliquid has demonstrated strong performance metrics, currently holding a 70% market share in decentralized perpetual futures trading. In August, the platform processed over $383 billion in trading volume and generated $106 million in revenue. This growth has positioned Hyperliquid as a dominant player in the decentralized finance (DeFi) space, outperforming traditional and decentralized competitors in trading efficiency. A proprietary stablecoin could further reduce Hyperliquid’s reliance on third-party assets like USDC while capturing potential revenue from reserve assets, according to the Hyperliquid Foundation [3].

In addition to the stablecoin, Paxos plans to integrate HYPE into its brokerage infrastructure, which currently powers crypto services for major payment processors such as PayPal, Venmo, and MercadoLibre. The integration of HYPE into this infrastructure would expand the token’s utility and enhance the Hyperliquid ecosystem’s exposure to traditional financial systems. The company’s broader strategy includes accelerating stablecoin adoption in decentralized ecosystems and leveraging its regulatory expertise to ensure USDH meets compliance standards across key markets [1].

The USDH ticker has been reserved for the stablecoin, with deployment proposals open to interested teams. The final selection will be determined through an on-chain validator consensus, ensuring decentralized governance in the process. This move aligns with broader industry trends where platforms are increasingly seeking to create their own stablecoins to maintain control over liquidity and regulatory compliance. As regulatory frameworks such as the GENIUS Act and MiCA gain traction, more firms are expected to follow similar strategies to secure institutional adoption and long-term stability [3].

Source:

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

[2] Paxos Proposes to Issue USDH Stablecoin for Hyperliquid ... (https://finance.yahoo.com/news/paxos-proposes-issue-usdh-stablecoin-113000004.html)

[3] Hyperliquid Moves Forward to Launch Proprietary ... (https://www.coindesk.com/tech/2025/09/05/hyperliquid-moves-forward-to-launch-proprietary-stablecoin)