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Paxos has strengthened it’s bid to issue the Paxos USDH Stablecoin for Hyperliquid unveiling a comprehensive plan that includes PayPal and Venmo integration, a robust revenue model and global scalability. The updated proposal positions the Paxos USDH Stablecoin as a leading contender in the race to power Hyperliquid’s decentralized exchange (DEX) with a secure widely accessible stablecoin.
On Wednesday, Paxos announced enhancements to its original proposal emphasizing that the Paxos USDH Stablecoin will benefit from direct support by PayPal. This support includes listing Hyperliquid’s HYPE token, enabling seamless on and off ramps for the new stablecoin and allowing both USDH and HYPE to be used for PayPal checkout. The Paxos USDH Stablecoin will also be integrated into Venmo and Xoom expanding its reach across PayPal’s suite of payment services.
PayPal has committed $20 million in incentives to the HYPE ecosystem, further solidifying the Paxos USDH Stablecoin’s role in driving adoption and liquidity. Paxos highlighted its regulatory compliance in the European Union ensuring that the Paxos USDH Stablecoin can circulate and scale globally reaching users across multiple jurisdictions.
A key feature of the updated proposal is the alignment of Paxos’s interests with the Hyperliquid ecosystem. Paxos stated that it will only benefit financially if Hyperliquid succeeds reinforcing the commitment to the platform’s long term growth. The Paxos USDH Stablecoin proposal specifies that Paxos will not receive any fees until the DEX reaches $1 billion in total value locked (TVL). After this milestone, Paxos will earn 1% of fees scaling up to a maximum of 5% once TVL surpasses $5 billion. All fees earned before reaching these milestones will be held in HYPE tokens further tying Paxos’s success to the ecosystem.
Initially, up to 80% of funds generated by the Paxos USDH Stablecoin will be allocated to ecosystem development. As TVL increases, this percentage will decrease to 25% with more funds directed to Hyperliquid’s Assistance Fund treasury. This protocol owned treasury uses platform revenues and fees to market buy HYPE functioning as both a buyback mechanism and an insurance fund for the ecosystem.
The Stablecoin proposal update arrives amid fierce competition among firms vying to issue USDH for Hyperliquid. Earlier in the week, a coalition including MoonPay, Agora and Rain submitted a joint proposal challenging a rival bid from an entity indirectly controlled by Stripe. Agora CEO Nick Van Eck raised concerns about potential conflicts arising from Stripe’s vertical integration.
Ethena Labs also entered the fray, becoming the sixth bidder for the USDH Stablecoin. The proposition of Ethena involves backing USDH with it’s own USDtb stablecoin tied to BlackRock’s BUIDL fund thereby adding another layer of innovation to the ongoing competition.
