Paxos and Hyperliquid Forge Compliant Stablecoin to Fuel Ecosystem Growth

Sky joins the competition for the issuance rights of the USDH stablecoin under Hyperliquid as Paxos, a stablecoin infrastructure firm, has submitted a formal proposal to launch a U.S. dollar-pegged stablecoin tailored for the Hyperliquid ecosystem. The initiative aligns with the firm’s stated goal of driving adoption and aligning incentives within the growing decentralized perpetual futures market [1]. The USDH stablecoin will be developed in accordance with the United States’ proposed Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) and the EU’s Markets in Crypto-Assets (MiCA) regulatory standards, ensuring a strong compliance profile from the outset [1].

According to the proposal, 95% of the interest earned from USDH reserves will be reinvested into the Hyperliquid ecosystem by repurchasing the platform’s native token, HYPE. These repurchased tokens will then be redistributed to users, validators, and partner protocols, forming a self-sustaining economic model that strengthens the value proposition of the platform [1]. This mechanism is designed to enhance long-term participation and loyalty among key stakeholders, including institutional players and on-chain builders.

Paxos Labs, a newly established division within Paxos, will lead the USDH initiative. The division has recently acquired Molecular Labs, the firm behind Hyperliquid primitives such as LHYPE and WHLP, providing further technical alignment with the platform’s infrastructure [1]. The USDH stablecoin will be deployed on both the HyperEVM and HyperCore chains, positioning the platform for broader institutional adoption by bridging it to global banking systems and regulatory frameworks. Paxos, already connected to over 70 financial partners across major markets, plans to leverage this existing infrastructure to distribute USDH globally [1].

Hyperliquid has already demonstrated its dominance in the decentralized perpetual futures market, capturing approximately 70% market share in recent months. The platform generated over $106 million in revenue in a single month, with nearly $400 billion in trading volume recorded. This performance underscores the strategic value of the USDH proposal and its potential to further solidify Hyperliquid’s position in the sector [1]. The initiative also reflects broader industry trends where platforms are increasingly seeking to reduce dependency on externally issued stablecoins like USDC.

The first governance vote on the USDH ticker is scheduled for September 14, 2024, with validators deciding the final naming convention. Notably, the vote will focus exclusively on the ticker name and does not confer any special privileges to USDH [2]. While some existing stablecoin teams have expressed concerns over the move, observers view the vote as a strategic test of Hyperliquid’s governance model and its ability to reduce centralized control [2]. Analysts suggest that USDH could evolve from a stablecoin into a powerful economic lever within the Hyperliquid ecosystem, particularly if it captures a significant portion of the platform’s liquidity [2].

Source:

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

[2] Hyperliquid Validators to Decide USDH Ticker in First ... (https://finance.yahoo.com/news/hyperliquid-validators-decide-usdh-ticker-052845788.html)