Paxos has put forth a proposal to introduce USDH, the first native stablecoin for Hyperliquid, with a commitment to allocate 95% of interest earnings from reserves towards HYPE token buybacks. This move positions Paxos as the frontrunner for validator selection, thanks to its recent acquisition of Molecular Labs and its extensive experience in stablecoin technology spanning over a decade.
Hyperliquid, a decentralized exchange, is gearing up to launch its native stablecoin through a validator voting process, with plans to reduce its trading fees by a whopping 80%. The platform has already reserved the ticker USDH and is inviting teams to submit deployment proposals, with the final selection to be determined by on-chain validator consensus.
The acquisition of Molecular Labs by Paxos to create Paxos Labs signals a strategic move to drive the adoption of stablecoins within decentralized ecosystems. This acquisition will enable Paxos to prioritize Hyperliquid as its first project under the new entity. Molecular Labs is known for its work on LHYPE and WHLP tokens, which have been operational since the launch of HyperEVM.
With a proven track record of issuing stablecoins for major platforms like Binance, PayPal, Kraken, Robinhood, and OKX, Paxos brings a wealth of experience to the table. The company has issued a total volume of $160 billion across seven tokenized assets and offers multi-jurisdictional compliance, including adherence to the GENIUS Act in the US and MiCA compliance in Europe.
USDH, the proposed stablecoin, will be deployed on both the HyperEVM and HyperCore blockchains with full regulatory oversight. The stablecoin will be backed by reserves in Treasury bills, repurchase agreements, and USDG tokens that meet institutional market maker requirements. The revenue-sharing model outlined by Paxos allocates 95% of interest earnings towards HYPE buybacks, benefiting protocols, validators, and users in proportion to their USDH balances and trading volumes.
Hyperliquid’s outstanding performance in the market has been a driving force behind the demand for stablecoins. Recent reports show that the platform generated $106 million in perpetual futures trading revenue in August, marking a 23% growth from the previous month. With a 70% market share in DeFi perpetuals and $383 billion in monthly trading volume, Hyperliquid’s efficiency ratios surpass those of traditional payment giants.
The HYPE token, currently trading at $47.33 following the Paxos announcement, has seen a 2% gain in the past 24 hours. Former BitMEX CEO Arthur Hayes has projected significant returns on HYPE by 2028 as Treasury-backed stablecoins reshape global banking.
The proposed revenue model for USDH aims to create an ecosystem flywheel effect by aligning incentives for application builders, validators, and community members. Analysis suggests that USDH could generate an additional $191 million annually in HYPE buybacks if it replaces USDC on Hyperliquid.
Paxos plans to integrate HYPE as a tradeable asset within its brokerage infrastructure, providing additional liquidity and institutional access for the governance token. The stablecoin will offer comprehensive funding capabilities, including direct fiat banking rails through SWIFT, ACH, and wire transfers, as well as seamless conversion from other stablecoins to USDH.
Community response to the proposal has been positive, with users recognizing Paxos’s stablecoin expertise and regulatory coverage as key differentiators. The proposal positions USDH as a globally compliant infrastructure that supports Hyperliquid’s evolution from a crypto-native platform to mainstream financial infrastructure.
In conclusion, Paxos’s proposal to issue USDH stablecoin for Hyperliquid with a revenue share towards HYPE buybacks marks a significant development in the world of decentralized finance. This move has the potential to reshape the stablecoin landscape and drive further adoption of cryptocurrencies within mainstream financial systems.