Paxos Proposes USDH Stablecoin That Could Funnel Yield Into Hyperliquid’s HYPE Buybacks

• USDH channels 95% of yield into HYPE buybacks to benefit ecosystem participants.

• Deployed on HyperEVM and HyperCore to connect Hyperliquid to banking rails and regulated markets.

• Paxos Labs leads the initiative, leveraging integrations with 70+ financial partners and custody infrastructure.

USDH stablecoin: Paxos-backed, Hyperliquid-first stablecoin with 95% yield allocated to HYPE buybacks — learn how institutions gain access.

Paxos has proposed a fully compliant USDH stablecoin for the Hyperliquid ecosystem, with most of its yield funneled into HYPE token buybacks.

Stablecoin infrastructure firm Paxos has submitted a proposal to launch USDH stablecoin, a Hyperliquid-first asset intended to comply with the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) and Markets in Crypto-Assets (MiCA) regulatory standards.

Under the proposal, 95% of interest earned from USDH reserves would be used to buy back Hyperliquid’s native token, HYPE, with distributions to users, validators and partner protocols.

“We propose the launch of USDH, a Hyperliquid-first, fully compliant stablecoin purpose built to drive adoption, align incentives, and anchor the ecosystem’s next era of growth,” Paxos wrote.

Paxos Labs, a newly formed entity within Paxos, will lead USDH. Paxos Labs has acquired infrastructure firm Molecular Labs, the developer behind Hyperliquid primitives LHYPE and WHLP, improving integration with Hyperliquid’s on-chain architecture.

Paxos proposes USDH stablecoin. Source: Paxos

What is the USDH stablecoin proposal from Paxos?

USDH stablecoin is a proposed regulated stablecoin designed for Hyperliquid that prioritizes compliance and ecosystem incentives. Paxos plans to deploy USDH on HyperEVM and HyperCore, using reserve yield primarily to repurchase HYPE and distribute value to stakeholders.

How will USDH bridge Hyperliquid to institutions?

Paxos intends to leverage its existing integrations with over 70 financial partners across the US, EU, Singapore, Abu Dhabi and Latin America to connect USDH to banking rails and regulated custody. Deployment on HyperEVM and HyperCore aims to provide standardized rails for institutions and mainstream fintech platforms.

Why allocate 95% of yield to HYPE buybacks?

Allocating 95% of reserve yield to HYPE buybacks is designed to align incentives across the network, increase token value capture, and fund distributions to builders, validators and users. The mechanism creates a direct feedback loop between stablecoin activity and native-token economics.

Frequently Asked Questions

Will USDH be compliant with global stablecoin regulations?

Yes. Paxos proposes USDH to meet the GENIUS Act and MiCA regulatory frameworks, with compliance baked into issuance and governance to satisfy institutional counterparties and regulated platforms.

Which chains will USDH support?

USDH will be deployed across HyperEVM and HyperCore, enabling cross-chain functionality within the Hyperliquid ecosystem and facilitating connectivity to external payment rails via Paxos’ partner network.

How does this affect HYPE holders?

HYPE holders should expect buyback-driven token supply reductions and regular distributions sourced from USDH reserve yield, intended to increase long-term value capture for network participants.

How dominant is Hyperliquid in decentralized perpetuals?

Hyperliquid generated over $106 million in revenue last month on nearly $400 billion in trading volume, representing roughly a 70% market share in decentralized perpetual futures, per DefiLlama data. Only Uniswap and PancakeSwap exceed Hyperliquid in weekly trading volume.

Summary comparison: Hyperliquid market metrics

Key Takeaways

• USDH stablecoin: A Paxos-proposed, compliant stablecoin purpose-built for Hyperliquid.
• Yield-to-buybacks: 95% of reserve yield earmarked for HYPE buybacks and ecosystem distributions.
• Institutional access: Deployment on HyperEVM/HyperCore plus Paxos’ partner network targets institutional adoption.

Conclusion

The USDH proposal represents a strategic attempt to combine regulatory compliance with tokenomic incentives, using reserve yield to directly fund HYPE buybacks and reward ecosystem participants. If approved and deployed on HyperEVM and HyperCore, USDH could accelerate institutional access to Hyperliquid and strengthen the network’s value capture.