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Paxos proposes Hyperliquid USDH stablecoin with 95% of reserve yield allocated to HYPE buybacks, linking adoption to ecosystem growth.
Author: Akshat Thakur
Published On: Sun, 07 Sep 2025 11:14:11 GMT
September 7, 2025 — Paxos has submitted a proposal to launch the Paxos Hyperliquid USDH stablecoin, a Hyperliquid-first digital dollar designed to comply with both the U.S. GENIUS Act and Europe’s MiCA rules. The initiative would funnel most of USDH’s reserve yield into buybacks of Hyperliquid’s native token HYPE, redistributing value to users, validators, and partner protocols.
In its announcement, Paxos called USDH a “Hyperliquid-first, fully compliant stablecoin purpose-built to drive adoption, align incentives, and anchor the ecosystem’s next era of growth.” The company said the design would channel 95% of reserve interest into HYPE buybacks, directly rewarding the community and strengthening the network’s tokenomics.
The proposal is led by Paxos Labs, a new division of Paxos formed after acquiring Molecular Labs, the developer behind Hyperliquid primitives LHYPE and WHLP. This acquisition gives Paxos deeper insight into Hyperliquid’s on-chain financial architecture.
The Paxos Hyperliquid USDH stablecoin would be deployed across both HyperEVM and HyperCore. By meeting global compliance standards, Paxos expects USDH to appeal to financial institutions, fintech platforms, and mainstream partners.
Paxos already operates in the U.S., EU, Singapore, Abu Dhabi, and Latin America, with integrations across more than 70 financial partners. It also powers crypto services for PayPal, Venmo, and MercadoLibre, giving it a strong foundation to distribute USDH at scale.
Unlike traditional stablecoins, USDH’s design explicitly ties reserve yields to the Hyperliquid ecosystem. Paxos plans to use 95% of earned interest to buy back HYPE tokens, redistributing them to validators, builders, and users. This could create a feedback loop that aligns stablecoin adoption with ecosystem growth.
Additionally, Paxos intends to integrate HYPE into its brokerage services, expanding liquidity channels and giving Hyperliquid more exposure across institutional rails.
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The proposal comes as Hyperliquid cements itself as the leading decentralized perpetuals exchange. The platform generated over $106 million in revenue last month on nearly $400 billion in trading volume, giving it a 70% market share in the sector, according to DeFiLlama. Only Uniswap and PancakeSwap exceed Hyperliquid in weekly DEX volumes.
The Paxos Hyperliquid USDH stablecoin proposal represents a milestone for Hyperliquid’s ecosystem. By aligning a compliant stablecoin with yield-backed HYPE buybacks, Paxos aims to accelerate adoption. The model links stablecoin demand directly to community rewards. If approved by validators, USDH could bridge Hyperliquid to global institutions. This would help cement its dominance in DeFi.
Real voices. Real reactions.
@Paxos @HyperliquidX If my memory serves me right, paxos was behind BUSD which was dominating until it got dismantled by 🇺🇸 govt. i think you would do great now that rules are clear and favorable
@Paxos @HyperliquidX Paxos is only gonna give yield to USDH holders. Even if they buyback HYPE its just gonna get sold by the USDH holders, there won't be any net buybacks. Not a big fan, but still thinking about this https://t.co/vHWoN5Ugqt
@Paxos @HyperliquidX You guys don't even own significant HYPE tokens. Don't bother, no one's going to vote for you.
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