Paxos is looking to deepen its footprint in decentralized finance with a proposal to launch a fully regulated stablecoin tailored to the Hyperliquid ecosystem.
The new asset, dubbed USDH, would be designed to comply with both U.S. and European regulatory frameworks, including the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) and the Markets in Crypto-Assets Regulation (MiCA).
Under the plan, 95% of the yield generated from USDH reserves would be used to buy back Hyperliquid’s native token, HYPE, with distributions flowing back to users, validators, and partner protocols. Paxos described the initiative as a way to “anchor the ecosystem’s next era of growth” by directly aligning incentives between the stablecoin and Hyperliquid’s core stakeholders.
The effort will be spearheaded by Paxos Labs, a new division within the company, which recently acquired Molecular Labs, the developer behind key Hyperliquid financial primitives LHYPE and WHLP. The acquisition is expected to give Paxos a stronger grasp of Hyperliquid’s on-chain infrastructure.
Expanding institutional access
USDH is set to launch across both the HyperEVM and HyperCore networks. By offering regulatory clarity and connecting to global banking rails, Paxos hopes the stablecoin can serve as a bridge between Hyperliquid and traditional finance.
The firm already partners with more than 70 financial institutions worldwide and operates in markets spanning the U.S., Europe, Singapore, Abu Dhabi, and Latin America. Paxos intends to leverage this network to distribute USDH at scale.
Beyond the buyback mechanism, Paxos said it will integrate HYPE into its broader brokerage infrastructure, the same systems that power crypto services for PayPal, Venmo, and MercadoLibre.
Hyperliquid’s growing dominance
The proposal comes as Hyperliquid cements its position in decentralized derivatives trading. In August, the platform generated more than $106 million in revenue on nearly $400 billion in trading volume, giving it roughly 70% market share in decentralized perpetual futures, according to DefiLlama. Only Uniswap and PancakeSwap reported higher weekly trading volumes across DeFi.
If approved, USDH could become a cornerstone of Hyperliquid’s ecosystem, reinforcing liquidity while channeling value back to its community and potentially setting a new standard for how stablecoins integrate with on-chain financial platforms.
