Hyperliquid Aims to Bridge DeFi and Institutions with Regulated USDH Stablecoin

Paxos has proposed the issuance of a new stablecoin, USDH, tailored for the Hyperliquid platform, with the aim of aligning incentives and driving growth in the decentralized finance (DeFi) ecosystem. The stablecoin, which will be fully compliant with the U.S. GENIUS Act and EU MiCA regulatory standards, is intended to serve as a bridge between Hyperliquid and institutional financial markets. Under the proposal, 95% of the interest earned from USDH reserves will be allocated toward buying back Hyperliquid’s native token, HYPE, and distributing the tokens back to users, validators, and partner protocols, reinforcing the platform’s commitment to community-driven value accrual [1].

The initiative will be led by Paxos Labs, a new division within Paxos, which recently acquired Molecular Labs, the infrastructure firm behind Hyperliquid’s core components LHYPE and WHLP. This strategic acquisition enhances Paxos’ understanding of Hyperliquid’s blockchain architecture, allowing for a more integrated and scalable solution. USDH will be deployed across both the HyperEVM and HyperCore chains, expanding Hyperliquid’s reach and potentially increasing its appeal to institutional investors and fintech platforms. The stablecoin will be backed by a rewards mechanism designed to incentivize ecosystem participation and liquidity provision [1].

Hyperliquid itself has demonstrated strong performance in the decentralized perpetual futures market. In the most recent month, the platform reported $106 million in revenue from nearly $400 billion in trading volume, capturing an estimated 70% market share in the sector, according to DefiLlama. Circle’s USDC currently dominates liquidity on the platform, accounting for 95% of the $5.6 billion in stablecoin supply. By launching USDH, Hyperliquid aims to reduce dependency on third-party stablecoins and capture a share of the yield generated from reserve assets. The move also aligns with broader industry trends, as more crypto platforms introduce compliant stablecoins to navigate evolving regulatory landscapes [1].

The USDH ticker is reserved by the Hyperliquid protocol and will be allocated through an on-chain governance process, in which validators will determine the team responsible for building the stablecoin. This approach mirrors the existing delisting vote mechanism and underscores Hyperliquid’s decentralized governance model. Following the announcement, HYPE’s price saw a modest increase, reaching $47.42 before retracing slightly to $46.51 within 24 hours. The token’s performance reflects investor confidence in the platform’s long-term vision and its ability to execute strategic initiatives [3].

In addition to USDH, Hyperliquid has announced a major protocol upgrade that includes an 80% reduction in taker and maker fees for dual-currency spot market pairs. The update is intended to improve liquidity and trading efficiency while introducing public spot quotes to increase transparency. To create these pairs, a minimum staking requirement of HYPE tokens will be enforced, with specific criteria to be outlined in future announcements. These changes are expected to further solidify Hyperliquid’s position as a leading decentralized exchange, particularly in light of recent records in Bitcoin spot trading volume surpassing that of Coinbase and Bybit [3].

Source: [1] Paxos Proposes Stablecoin for Hyperliquid with HYPE Buyback (https://cointelegraph.com/news/paxos-proposes-usdh-stablecoin-for-hyperliquid) [2] Hyperliquid Moves Forward to Launch Proprietary Stablecoin (https://www.coindesk.com/tech/2025/09/05/hyperliquid-moves-forward-to-launch-proprietary-stablecoin) [3] Hyperliquid Could Launch USDH Stablecoin in Next Network Upgrade (https://thedefiant.io/news/defi/hyperliquid-could-launch-usdh-stablecoin-in-next-network-upgrade) [4] Hyperliquid Plans USDH Stablecoin Launch (https://coinpaper.com/10912/hyperliquid-plans-usdh-stablecoin-launch-but-there-s-a-catch) [5] Popular DEX Hyperliquid Moves Forward to Launch (https://finance.yahoo.com/news/popular-dex-hyperliquid-moves-forward-200815490.html)