The air in the stablecoin world feels thick with anticipation, a bit like waiting for a high-stakes poker game to reveal its hand. Everyone watches Hyperliquid, a decentralized exchange that’s become quite the talk of the town. They are looking for a partner to launch their new USDH stablecoin, and the bids are coming in hot.
- Paxos has proposed a partnership with PayPal and Venmo to integrate USDH into their payment channels, aiming for global distribution and everyday transaction use.
- The proposal includes listing Hyperliquid’s HYPE token, adding USDH support to PayPal’s on/off-ramp products at no user cost, and a $20 million incentive commitment from PayPal to the HYPE ecosystem.
- Paxos also details an updated rewards system for USDH, reinvesting revenue into growth initiatives until TVL hits $1 billion, and plans to leverage PYUSD as a reserve asset for USDH to enhance confidence and compliance.
One player, Paxos, just upped its game. They rolled out an updated proposal, a Version 2, that includes a rather eye-catching partnership. Imagine your everyday PayPal or Venmo, now potentially carrying a new stablecoin. That’s the vision Paxos is pitching.
This isn’t just a casual mention. Paxos wants to weave USDH directly into PayPal’s checkout and payment channels. Think about the reach that offers, a real shot at global distribution. It’s a move that could make USDH feel less like a niche crypto asset and more like something you might actually use for everyday transactions.
But the PayPal connection goes further. The proposal suggests PayPal and Venmo would list Hyperliquid’s native HYPE token. They would also add USDH support to PayPal’s on/off-ramp products, all at no cost to the user. And if that wasn’t enough to turn heads, PayPal is reportedly committing $20 million in incentives to the HYPE ecosystem. That’s a serious chunk of change.
Paxos isn’t just relying on big names, though. Their proposal details an updated rewards system for USDH. Revenue generated from the stablecoin would get reinvested directly into growth initiatives and Hyperliquid’s Assistance Fund (AF). This continues until the stablecoin’s total value locked (TVL), which is the total amount of assets held in its smart contracts, hits $1 billion.
Even after USDH crosses the $5 billion TVL mark, Paxos plans to cap its own revenue share at a modest 5%. It’s a structure designed to align incentives. As Paxos put it, “Together, this framework ensures Paxos only wins if Hyperliquid wins, and USDH becomes the gateway stablecoin for global DeFi adoption.” It’s a clear statement of shared destiny.
Beyond the financial mechanics, Paxos also highlights its strong regulatory standing. They mention compliance with the GENIUS Act. They also claim to be the only company legally able to issue tokens in Europe. This kind of regulatory clarity is a big deal in the often-murky waters of digital assets.
To further bolster compliance and stability, Paxos plans to add PYUSD, PayPal’s own stablecoin, as a reserve asset for USDH. It’s a clever move, leveraging one regulated stablecoin to support another. This could offer an extra layer of confidence for potential users.
Beyond the Retail Horizon
Paxos sees Hyperliquid as more than just a platform for individual traders. Their updated proposal outlines a plan to help Hyperliquid become a liquidity infrastructure for enterprises. This is a step beyond its current user base, which tends to be more focused on retail trading.
“Paxos has the ability to materialize this vision of scaling frontend access to Hyperliquid by working with fintech enterprises and brokerages to incorporate builder codes,” the proposal states. This means Paxos would help big financial players integrate Hyperliquid’s technology directly into their own systems. Think of it like providing the plumbing for other businesses to build on.
For this initiative, Paxos aims to draw asset issuers into Hyperliquid’s open market creation system, known as HIP-3. They also plan to use HyperEVM to improve how Hyperliquid connects with other decentralized finance (DeFi) applications. DeFi, if you’re new to it, refers to financial services built on blockchain technology, without traditional intermediaries.
And there’s more. Paxos also intends to develop an “Earn” product using USDH. This product would then be integrated into various consumer applications. It’s a way to make stablecoin earnings accessible to a wider audience, perhaps even those who aren’t deep into crypto already.
This enterprise push isn’t just talk. Paxos already has a track record. They provide stablecoin services for some pretty big names. Stripe, Mastercard, Robinhood, Nubank, Mercado Libre, and Interactive Brokers all use Paxos’ established infrastructure. This existing network gives their proposal a lot of weight.
The Battle for USDH
Of course, Paxos isn’t alone in this race. The competition for the USDH contract is fierce, a clear sign of Hyperliquid’s rising influence in the DeFi space. It also shows the growing significance of stablecoins themselves, which act as a bridge between traditional money and the crypto world.
Frax Finance, another strong contender, has its own interesting pitch. They propose backing USDH with their frxUSD stablecoin. What makes frxUSD particularly noteworthy is that it’s backed by BlackRock’s BUIDL fund. That’s a big name in traditional finance, lending a different kind of credibility to the offer.
Then there’s a coalition of Agora, Rain, and LayerZero. Their proposal emphasizes neutrality, pledging a 100% net revenue share to Hyperliquid. It’s a different approach, focusing on maximizing Hyperliquid’s direct financial benefit. Ethena Labs and Sky have also thrown their hats into the ring, adding more layers to this intriguing contest.
Hyperliquid, a decentralized perpetuals exchange (a place where you can trade contracts that never expire), announced its search for a USDH issuer just last Friday. They set a deadline of September 10 for proposals. The validators, who are the network participants responsible for confirming transactions, are scheduled to vote on the winner starting September 14. The Hyperliquid Foundation itself will abstain from the vote, ensuring a fair process.
This bidding war is more than just a contract for a stablecoin. It’s a glimpse into the future of DeFi. It shows how traditional finance and crypto are slowly, perhaps inevitably, starting to intertwine. The winner here won’t just issue a token; they might just shape a piece of the next financial landscape.