Paxos and Hyperliquid Forge Regulated Stablecoin Powering DeFi Growth

A significant development in the stablecoin and decentralized exchange (DeFi) landscape emerged as Paxos submitted a proposal to issue USDH, a stablecoin for Hyperliquid, a leading decentralized exchange. The initiative is part of a broader effort to integrate institutional-grade infrastructure and regulatory compliance into the DeFi ecosystem, with USDH expected to be the first native stablecoin on Hyperliquid’s blockchain.

Paxos, known for its extensive experience in issuing stablecoins for major financial platforms such as Binance, PayPal, and Robinhood, has established a new entity, Paxos Labs, specifically to accelerate stablecoin adoption in decentralized ecosystems. The company recently acquired Molecular Labs, the infrastructure provider behind Hyperliquid’s LHYPE and WHLP tokens, adding native ecosystem expertise. This acquisition, combined with Paxos’s multi-jurisdictional compliance capabilities, positions the firm as a strong candidate to become the validator for USDH issuance.

The USDH stablecoin is designed to be deployed natively on both Hyperliquid’s HyperEVM and HyperCore blockchains, with full regulatory oversight. The stablecoin will be backed by a mix of assets including U.S. Treasury bills, repurchase agreements, and USDG tokens to meet institutional-grade market maker requirements. A unique feature of the proposal is the revenue-sharing model, which allocates 95% of interest earnings from USDH reserves toward HYPE token buybacks. These buybacks will be distributed proportionally based on USDH balances and trading volumes across Hyperliquid platforms.

The proposal comes at a time of rapid growth for Hyperliquid. In August, the platform generated $106 million in perpetual futures trading revenue, representing a 23% increase from July’s $86.6 million. Over the past month, Hyperliquid captured a 70% market share in DeFi perpetual futures, processing $383 billion in monthly trading volume. Despite operating with only 11 employees, the platform achieved an annual trading volume of $330.8 billion, demonstrating a level of operational efficiency that exceeds traditional payment giants.

The USDH stablecoin initiative aligns with Hyperliquid’s strategy to expand its decentralized infrastructure while maintaining compliance with global regulatory standards. Paxos, having issued over $160 billion in tokenized assets across seven different stablecoins, brings both technical and compliance expertise to the project. The company also holds banking licenses in Singapore and Abu Dhabi and operates cross-border payment corridors in several emerging markets, enhancing USDH’s potential reach.

Hyperliquid has reserved the USDH ticker and invited teams to submit deployment proposals, with the final selection to be determined through on-chain validator consensus. As the DeFi market continues to evolve, the integration of USDH could serve as a catalyst for broader institutional participation, particularly as it offers a transparent and regulated stablecoin backed by high-quality assets and a revenue model that benefits token holders and validators alike.