Paxos has unveiled an updated version of its proposal to issue Hyperliquid’s forthcoming USDH stablecoin, positioning itself as a leading contender in a competitive process to secure the role of issuer.Paxos has unveiled an updated version of its proposal to issue Hyperliquid’s forthcoming USDH stablecoin, positioning itself as a leading contender in a competitive process to secure the role of issuer.

USDH V2: Paxos Pushes Compliance, PayPal Network, and Global Expansion

2025/09/10 23:13
2 min read

Paxos has unveiled an updated version of its proposal to issue Hyperliquid’s forthcoming USDH stablecoin, positioning itself as a leading contender in a competitive process to secure the role of issuer.

PayPal Integration at the Core

A central feature of the Paxos V2 proposal is its partnership with PayPal, which would embed USDH into PayPal’s global payment infrastructure. The plan includes free on- and off-ramps through PayPal and Venmo, with the stablecoin also supported across Checkout, Braintree, Hyperwallet, and Xoom. By capitalizing on PayPal’s reach, which spans over 400 million accounts and 35 million merchants, the proposal seeks to eliminate conversion fees and simplify entry into decentralized finance.

As the proposal states, 

Incentives and HYPE Alignment

Paxos’ plan introduces a performance-based economic model that ties its revenue to Hyperliquid’s growth. Fees are capped at 5% and are only applied once Total Value Locked (TVL) milestones are reached. Additionally, all fees will be paid in HYPE, Hyperliquid’s governance token, reinforcing the integration of the stablecoin within the broader ecosystem. The proposal also outlines revamped rewards for participants, aimed at driving adoption while ensuring that incentives remain aligned with the community.

Compliance and Global Reach

A distinguishing element of the Paxos bid is its regulatory approach. Operating under the oversight of the New York Department of Financial Services, the company has highlighted its capacity to comply with frameworks such as the GENIUS Act in the U.S. and MiCA in Europe. The proposal underscores that Paxos is the only issuer able to legally issue stablecoins across Europe, giving USDH a pathway to global scalability. With reserves backed by liquid assets such as U.S. Treasury Bills, Paxos argues that USDH offers stronger assurances than alternatives that have faced criticism over reserve transparency.

Market Outlook

Community response to Paxos’ updated proposal has been largely favorable, with analysts noting its potential to bridge traditional finance and DeFi through the PayPal integration. By leveraging established payment networks, Paxos aims to drive mainstream adoption of USDH while positioning it as a regulatory-compliant alternative to dominant stablecoins like USDC and USDT. If successful, the strategy could set USDH apart as a central asset within Hyperliquid and beyond.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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