Paxos has set its sights on Hyperliquid with a new proposal that could reshape how stablecoins interact with blockchain ecosystems.
The company wants to launch USDH, a U.S. dollar–pegged token that would function as Hyperliquid’s flagship stablecoin while adhering to some of the toughest regulatory frameworks worldwide.
Instead of simply offering another dollar-backed token, Paxos has designed USDH with a built-in rewards engine. Nearly all of the interest earned on reserves — about 95% — would be used to repurchase HYPE, Hyperliquid’s native asset. Those tokens would then cycle back into the network, rewarding validators, developers, and active users. The mechanism, Paxos argues, would tie the stablecoin directly to Hyperliquid’s growth and strengthen incentives across its ecosystem.
A New Arm for Paxos
The effort is being driven by Paxos Labs, a recently established branch of the company. To prepare, Paxos Labs acquired Molecular Labs, the team responsible for Hyperliquid primitives like LHYPE and WHLP. That purchase gives the new unit an insider’s view of Hyperliquid’s financial architecture and ensures it can design USDH to work seamlessly with both HyperEVM and HyperCore chains.
Institutional Playbook
Paxos is pitching USDH not only as a tool for crypto-native users but as a bridge for traditional institutions. By ensuring compliance with both the proposed GENIUS Act in the U.S. and MiCA in Europe, Paxos aims to eliminate one of the biggest barriers holding back stablecoin adoption at scale: regulatory uncertainty.
The company is well-positioned to push USDH into the mainstream. Paxos already supports more than 70 financial institutions worldwide and powers crypto services for platforms like PayPal, Venmo, and MercadoLibre. With that distribution network in place, USDH could quickly find its way into both institutional desks and consumer-facing fintech platforms.
More Than Just a Stablecoin
Beyond the stablecoin itself, Paxos has plans to embed HYPE into its broader brokerage and settlement infrastructure. This move could give Hyperliquid visibility far beyond its current user base, bringing its token and ecosystem into closer alignment with global finance.
If adopted, USDH would represent a new model for blockchain-native stablecoins — one that doesn’t just preserve value but actively recycles it back into the network that hosts it. For Hyperliquid, it could mark the beginning of its most ambitious growth phase yet.
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/paxos-proposes-usdh-stablecoin-to-power-hyperliquid-ecosystem/