Paxos proposes Hyperliquid-first stablecoin, allocates yield to HYPE buybacks
Paxos has proposed a fully compliant USDH stablecoin for the Hyperliquid ecosystem, with most of its yield funneled into HYPE token buybacks.
Stablecoin infrastructure firm Paxos has submitted a proposal to launch USDH, a Hyperliquid-first stablecoin that would be fully compliant with the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) and Markets in Crypto-Assets (MiCA) regulatory standards.
According to the announcement, published on Saturday, 95% of interest earned from USDH reserves would be used to buy back Hyperliquid’s native token HYPE, redistributing it to users, validators and partner protocols.
“We propose the launch of USDH, a Hyperliquid-first, fully compliant stablecoin purpose built to drive adoption, align incentives, and anchor the ecosystem’s next era of growth,” Paxos wrote.
Paxos Labs, a newly formed entity within Paxos, will lead the initiative. It has acquired infrastructure firm Molecular Labs, the developer behind Hyperliquid primitives LHYPE and WHLP, enhancing its understanding of Hyperliquid’s onchain financial architecture.
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USDH to bridge Hyperliquid to institutions
USDH will be deployed across both HyperEVM and HyperCore chains. The project aims to make Hyperliquid more attractive to institutions and mainstream fintech platforms by bridging it to global banking rails and regulatory clarity, according to Paxos.
Paxos, already integrated with over 70 financial partners and operating in key markets including the US, EU, Singapore, Abu Dhabi, and Latin America, will leverage this infrastructure to distribute USDH.
The proposal comes with a built-in rewards mechanism. Paxos plans to allocate most of the yield from USDH reserves to buy back HYPE and channel the value back to the Hyperliquid ecosystem. This includes direct distributions to builders, validators and users.
Beyond the stablecoin, Paxos says it will integrate HYPE into its brokerage infrastructure, which already powers crypto services for PayPal, Venmo and MercadoLibre.
Hyperliquid captures 70% of decentralized perp market
Hyperliquid has emerged as a dominant force in decentralized perpetual futures, generating over $106 million in revenue last month on nearly $400 billion in trading volume.
This gives the platform a commanding 70% market share in the sector, with only Uniswap and PancakeSwap surpassing it in weekly trading volume, according to DefiLlama.
