Paxos Proposes to Issue USDH Stablecoin for Hyperliquid with 95% Revenue Share to HYPE Buyback

Paxos submitted a proposal to issue USDH, Hyperliquid’s first native stablecoin, promising to allocate 95% of interest earnings from reserves toward HYPE token buybacks.

The blockchain infrastructure provider is currently seen as the leading candidate for validator selection due to its acquisition of Molecular Labs and its decade-long stablecoin expertise.

The proposal comes as Hyperliquid prepares to launch its native stablecoin through a validator vote process, slashing its trading fee by 80%.

The decentralized exchange reserved the USDH ticker and invited teams to submit deployment proposals, with selection determined by on-chain validator consensus.

Paxos Labs Acquires Hyperliquid Infrastructure Provider

Paxos established Paxos Labs specifically to accelerate stablecoin adoption within decentralized ecosystems, and will make Hyperliquid its first priority.

The new entity acquired Molecular Labs, the infrastructure provider behind the LHYPE and WHLP tokens that have been operational since HyperEVM’s launch.

The acquisition provides native Hyperliquid ecosystem experience while leveraging Paxos’s track record issuing stablecoins for Binance, PayPal, Kraken, Robinhood, and OKX.

The company has achieved a cumulative issuance volume of $160 billion across seven tokenized assets.

Paxos offers multi-jurisdictional compliance, including adherence to the GENIUS Act in the United States and MiCA compliance across Europe.

The firm claimed it maintains banking licenses in Singapore and Abu Dhabi while operating payment corridors across Brazil, Mexico, Argentina, Turkey, the UAE, and the Philippines.

According to the company, USDH will be deployed natively on both HyperEVM and HyperCore blockchains, with full regulatory oversight.

The stablecoin will hold reserves in Treasury bills, repurchase agreements, and USDG tokens meeting institutional market maker requirements.

The revenue-sharing model allocates 95% of interest earnings toward HYPE buybacks, which are distributed among protocols, validators, and users.

Distribution will be proportional to USDH balances and trading volumes across partnering Hyperliquid platforms.

Hyperliquid’s Record-Breaking Performance Drives Stablecoin Demand

Earlier this month, a report by Cryptonews showed that Hyperliquid generated $106 million in perpetual futures trading revenue during August, marking 23% growth from July’s $86.6 million.

The platform captured a 70% market share among DeFi perpetuals, processing $383 billion in monthly trading volume.

The exchange operates with just 11 employees while achieving an annual volume of $330.8 billion, creating efficiency ratios that surpass those of traditional payment giants.

Trading activity peaked at $29 billion in 24-hour volume during market volatility, generating $7.7 million in daily fees.

Total value locked climbed to $762.57 million from $230.48 million in April, while cumulative perpetual futures volume reached $2.57 trillion.

At the time of writing, the HYPE token is trading at $47.33 following the Paxos announcement, maintaining gains of 2% in the past 24 hours.

Late last month, Former BitMEX CEO Arthur Hayes projected 126x returns on HYPE by 2028 as Treasury-backed stablecoins reshape global banking.

Revenue Model Creates Ecosystem Flywheel Effect

USDH aims to extend Hyperliquid’s builder code concept, which shares exchange revenue with volume drivers, to stablecoin economics.

The proposed revenue distribution aims to create aligned incentives for application builders, validators, and community members.

Current analysis suggests USDH could generate $191 million annually in additional HYPE buybacks if replacing USDC usage on Hyperliquid.

The calculation uses existing bond and cash ratios from Circle’s USDC reserves applied to Hyperliquid’s stablecoin volumes.

Paxos plans to integrate HYPE as a tradeable asset within its brokerage infrastructure, powering crypto trading for PayPal, Venmo, MercadoLibre, Nubank, and Interactive Brokers.

The integration would provide additional liquidity and institutional access for the governance token.

The stablecoin will support comprehensive funding capabilities, including direct fiat banking rails through SWIFT, ACH, and wire transfers.

Moreover, native conversion from Circle’s USDC, PYUSD, and USDG to USDH eliminates secondary market price exposure for users.

USDH also enables real payment functionality through card issuance, merchant acceptance, and enterprise fintech integrations.

The infrastructure connects Hyperliquid to global consumer banking systems beyond crypto-native users.

Community response has been positive, with users highlighting Paxos’s unmatched stablecoin experience and regulatory coverage as differentiating factors.

The proposal portrays USDH as a globally compliant infrastructure that supports Hyperliquid’s transition from a crypto-native platform to mainstream financial infrastructure.

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