Paxos Targets Hyperliquid’s Growing Perpetual Futures Market with USDH Stablecoin

TLDR

• Paxos has proposed a fully compliant USDH stablecoin for the Hyperliquid ecosystem
• 95% of interest earned from USDH reserves would be used to buy back HYPE tokens
• Hyperliquid has opened proposals for teams to issue a USDH stablecoin on its network
• Existing stablecoin protocol Hyperstable has called the process “unfair” as they were previously blocked from using the USDH ticker
• Hyperliquid currently dominates 70% of the decentralized perpetual futures market

The stablecoin landscape is heating up as Paxos, a leading stablecoin infrastructure firm, has proposed launching USDH, a new stablecoin designed specifically for the Hyperliquid ecosystem. The proposal comes as Hyperliquid has emerged as a major player in decentralized finance, capturing 70% of the decentralized perpetual futures market.

According to Paxos’ announcement on Saturday, USDH would be fully compliant with both the GENIUS Act and MiCA regulatory standards. This compliance focus appears aimed at making the stablecoin attractive to institutional investors and mainstream financial platforms.

A key feature of the proposal is that 95% of interest earned from USDH reserves would be used to buy back Hyperliquid’s native token HYPE. These buybacks would redistribute value to users, validators and partner protocols within the ecosystem.

Paxos Labs, a newly formed entity, will lead the initiative. The firm has already acquired infrastructure developer Molecular Labs, which created Hyperliquid primitives LHYPE and WHLP, giving Paxos deeper insights into Hyperliquid’s financial architecture.

The proposed stablecoin would operate across both HyperEVM and HyperCore chains. By leveraging Paxos’ existing relationships with over 70 financial partners across major markets including the US, EU, Singapore, and Abu Dhabi, USDH aims to bridge Hyperliquid to global banking rails.

Controversy Surrounds Proposal Process

The USDH ticker has become a point of contention within the Hyperliquid community. Hyperliquid recently opened a five-day voting period for validators to select which team would receive rights to issue a stablecoin under the USDH ticker.

However, Hyperstable, an established stablecoin protocol on Hyperliquid, has pushed back against the announcement. According to a user identified as Max from Hyperstable, the USDH ticker had previously been blacklisted, forcing them to use USH instead.

“It seems unfair that the goal posts are now shifted after the game has already started months ago,” Max wrote in a Discord post. The team argued that many builders had already launched products and “reached the point of no return” based on previous guidelines.

Questions have also been raised about the proposal from Native Markets, which appeared shortly after Hyperliquid’s announcement. Some community members have questioned whether Native Markets had advance notice, pointing to suspicious wallet funding activity that occurred just hours before the official announcement.

One user called HyperInvestigator questioned whether Native Markets was operating independently or had an undisclosed relationship with Hyperliquid. This concern is amplified by the fact that Hyperliquid Foundation validators control more than 60% of staked HYPE tokens, potentially influencing the vote outcome.

Hyperliquid’s Growing Market Position

The controversy comes against the backdrop of Hyperliquid’s rapid rise in the decentralized finance space. The platform generated over $106 million in revenue last month on nearly $400 billion in trading volume, giving it a commanding position in the decentralized perpetual futures market.

Only Uniswap and PancakeSwap currently surpass Hyperliquid in weekly trading volume, according to data from DefiLlama. This market position makes the platform an attractive target for stablecoin issuers seeking high-volume trading environments.

Beyond the stablecoin proposal, Paxos has indicated plans to integrate HYPE into its brokerage infrastructure, which already powers crypto services for major payment platforms including PayPal, Venmo and MercadoLibre.

The outcome of the validator vote will determine which team receives rights to the USDH ticker. Once quorum is reached, the ticker will be released to the address of the winning proposal, setting the stage for the next chapter in Hyperliquid’s development.

Stablecoins have become one of crypto’s most widely adopted use cases, with many new entrants appearing throughout the year. From Trump-linked World Liberty Financial’s USD1 to plans from major retailers like Amazon and Walmart, the stablecoin sector continues to expand rapidly.

The post Paxos Targets Hyperliquid’s Growing Perpetual Futures Market with USDH Stablecoin appeared first on Blockonomi.