Paxos has submitted a proposal to launch a fully compliant stablecoin named USDH for the Hyperliquid ecosystem. The initiative, led by the newly formed Paxos Labs, is contingent upon approval from the Hyperliquid community via a validator vote. The proposed stablecoin is designed to accelerate adoption and enterprise integration, moving Hyperliquid beyond its “crypto enthusiast” base toward a broader, institutional audience.
Key details of the USDH proposal:
- Compliant and regulated: USDH is designed to be fully compliant with US (GENIUS Act) and EU (MiCA) regulatory standards, ensuring a secure and trusted stablecoin for the ecosystem.
- Revenue sharing mechanism: In a move to align incentives within the ecosystem, Paxos proposes to use 95% of the interest income from USDH reserves to buy back Hyperliquid’s native HYPE token. These tokens would then be redistributed to users, validators, and partner protocols, rewarding those who contribute to the ecosystem’s growth.
- Expansion of capabilities: USDH would be minted natively on the HyperEVM and HyperCore networks and would include features such as direct fiat banking rails (SWIFT, ACH), native conversion from other stablecoins (USDC, PYUSD, USDG), and functionality for real-world payments via cards and merchant acceptance.
- Targeted acquisition: Paxos Labs has acquired Molecular Labs, an infrastructure provider for Hyperliquid, to deepen its understanding and integration with Hyperliquid’s on-chain financial architecture.
- Institutional integration: Paxos plans to integrate HYPE into its brokerage infrastructure, which services clients like PayPal, Venmo, and MercadoLibre. This would provide additional liquidity and institutional access for the token.
This proposal comes as Hyperliquid is opening the stablecoin deployment process to a competition among development teams, with the final selection being decided by validator consensus. A competing proposal was also submitted by Frax Finance.
Want to dive deeper into the technical details of the USDH proposal, the potential impact on USDC on Hyperliquid, or the other stablecoin proposals for the Hyperliquid ecosystem? I can help with that if you want.