Paxos Crafts Regulated Bridge to Power Hyperliquid’s Ecosystem Growth

Paxos, a leading stablecoin infrastructure provider, has proposed the launch of USDH, a Hyperliquid-first stablecoin designed to align with regulatory frameworks in the United States and the European Union. The stablecoin will comply with the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) in the U.S. and the Markets in Crypto-Assets (MiCA) regulation in the EU. The initiative aims to create a bridge between Hyperliquid and institutional and fintech platforms by offering regulatory clarity and global banking integration.

Under the proposal, 95% of the interest earned from USDH’s reserves—expected to be held in high-quality assets such as U.S. Treasury bills—will be allocated to repurchasing Hyperliquid’s native token, HYPE. These buybacks will be redistributed to users, validators, and partner protocols, creating a feedback loop that supports the growth of the Hyperliquid ecosystem. Paxos Labs, a newly established entity under Paxos, will lead the project and has already acquired Molecular Labs, a firm responsible for developing key components within Hyperliquid’s infrastructure. This move reinforces Paxos’s understanding of the platform’s on-chain architecture and positions it as a strategic partner in its next phase of expansion.

USDH will be deployed across Hyperliquid’s two blockchain networks, HyperEVM and HyperCore, and will be distributed through Paxos’s global network of over 70 financial partners. These include institutions in the U.S., EU, Singapore, Abu Dhabi, and Latin America, which will facilitate broader adoption and liquidity for the stablecoin. The proposal emphasizes Paxos’s ability to scale USDH globally while maintaining compliance with evolving regulatory standards.

Hyperliquid has emerged as a dominant force in the decentralized perpetual futures market, capturing approximately 70% of trading volume in the sector. In August alone, the platform generated $106 million in revenue from perpetual futures trading, marking a 23% increase compared to July. The launch of USDH is expected to further strengthen Hyperliquid’s position by reducing its reliance on external stablecoins like USDC and USDT and enabling the platform to capture additional revenue from its native ecosystem.

Paxos’s proposal is currently under review by Hyperliquid’s validator community, with final approval required for the stablecoin to proceed. The proposal has drawn positive feedback for its focus on ecosystem growth and regulatory alignment, but it is competing with other entities that have also submitted plans for USDH issuance. These include Frax Finance, Agora, and Native Markets, each offering different mechanisms for reserve management and HYPE token buybacks.

The integration of USDH into the Hyperliquid ecosystem represents a strategic step toward institutional adoption, with Paxos leveraging its experience in launching and scaling stablecoins for major platforms such as Binance, PayPal, and Kraken. The firm has also integrated HYPE into its brokerage infrastructure, which powers crypto services for PayPal, Venmo, and MercadoLibre. This move strengthens the potential for USDH to become a central pillar in Hyperliquid’s financial infrastructure, supporting both retail and institutional users.

Source: [1] Paxos Proposes Stablecoin for Hyperliquid with HYPE ... (https://cointelegraph.com/news/paxos-proposes-usdh-stablecoin-for-hyperliquid) [2] Meet the bidders vying to build Hyperliquid's USDH stablecoin (https://www.dlnews.com/articles/defi/paxos-frax-agora-and-native-markets-compete-to-build-usdh-stablecoin/) [3] Paxos to Launch Stablecoin for Hyperliquid Ecosystem (https://forklog.com/en/paxos-to-launch-stablecoin-for-hyperliquid-ecosystem/?amp) [4] Hyperliquid Price: HYPE Live Price Chart, Market Cap & ... (https://www.coingecko.com/en/coins/hyperliquid) [5] Lion Group Shifts to HYPE as Token Hits New All-Time High (https://cointelegraph.com/news/lion-group-buys-hype-token-sells-solana-sui) [6] Hyperliquid (HYPE) Price Prediction: RSI Reset and Strong ... (https://bravenewcoin.com/insights/hyperliquid-hype-price-prediction-rsi-reset-and-strong-support-point-to-60-70-target) [7] Paxos Proposes to Issue USDH Stablecoin for Hyperliquid ... (https://finance.yahoo.com/news/paxos-proposes-issue-usdh-stablecoin-113000004.html) [8] Paxos to Launch Stablecoin for Hyperliquid Ecosystem (https://forklog.com/en/paxos-to-launch-stablecoin-for-hyperliquid-ecosystem/)