Paxos and Native Markets Compete to Launch USDH Stablecoin on Hyperliquid

TLDR

• Paxos proposes USDH stablecoin for Hyperliquid with 95% of yield going to HYPE token buybacks
• Hyperliquid opens five-day validator voting process for teams to build USDH stablecoin
• Existing protocol Hyperstable calls process “unfair” after being blocked from USDH ticker previously
• Native Markets accused of having advance notice due to timing of proposal and funding patterns
• Hyperliquid controls 70% of decentralized perpetual futures market with $400 billion monthly volume

Stablecoin infrastructure firm Paxos has submitted a proposal to create USDH, a stablecoin designed specifically for the Hyperliquid ecosystem. The proposal calls for a fully compliant token that meets both US GENIUS Act and European MiCA regulatory standards.

Under Paxos’s plan, 95% of interest earned from USDH reserves would fund HYPE token buybacks. These purchased tokens would then be redistributed to users, validators, and partner protocols within the Hyperliquid ecosystem.

Paxos Labs, a new entity within the company, will lead the initiative after acquiring infrastructure firm Molecular Labs. This acquisition gives Paxos deeper knowledge of Hyperliquid’s blockchain architecture and existing financial tools.

The stablecoin would deploy across both HyperEVM and HyperCore chains. Paxos plans to leverage its existing partnerships with over 70 financial institutions across the US, EU, Singapore, Abu Dhabi, and Latin America to distribute USDH.

Validator Vote Opens Competition

Hyperliquid opened a five-day voting period for validators to choose which team should build the USDH stablecoin. The foundation announced that the ticker should go to a team creating a “Hyperliquid-first, Hyperliquid-aligned, and compliant USD stablecoin.”

Three proposals have emerged in the competition. Native Markets submitted a proposal just over an hour after the announcement, offering a GENIUS Act-compliant stablecoin with integrated fiat gateways and revenue sharing with the Hyperliquid Assistance Fund.

The timing has raised suspicions among community members. The Native Markets deployer address was funded just five hours before Hyperliquid’s announcement, leading to questions about potential advance notice.

Existing Protocol Objects

Hyperstable, an established stablecoin protocol on Hyperliquid, has voiced strong objections to the process. The protocol’s representative, known as Max, claims the USDH ticker was previously blacklisted, forcing Hyperstable to use USH instead.

Max argues that changing the rules after builders have already launched and committed resources is unfair to existing teams. The protocol has called for the foundation to either keep the USDH ticker blacklisted or build an in-house stablecoin themselves.

Community member Shisho countered that the regulatory environment has changed following the GENIUS Act’s passage into law. This shift, they argue, justifies reconsidering the ticker availability.

Platform Dominance Drives Interest

Hyperliquid has captured approximately 70% of the decentralized perpetual futures market. The platform generated over $106 million in revenue last month on nearly $400 billion in trading volume.

Only Uniswap and PancakeSwap exceed Hyperliquid’s weekly trading volume according to DefiLlama data. This market position makes the platform attractive for stablecoin issuers seeking high usage and liquidity.

The validator voting process will conclude within five days, with the winning team receiving rights to the USDH ticker once quorum is reached.

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