Paxos Labs has unveiled a revised proposal to become the official issuer of Hyperliquid’s upcoming USDH stablecoin, pitching a plan that leverages its partnerships with PayPal and Venmo to expand the token’s global reach.
The updated proposal, published Tuesday, comes amid a competitive bidding process that has drawn interest from several leading stablecoin issuers. Paxos’ version 2 framework centers on making USDH a widely adopted settlement asset, particularly by integrating it into PayPal’s checkout and payment rails.
Under the plan, PayPal and Venmo would also list Hyperliquid’s native HYPE token, while supporting USDH through PayPal’s on- and off-ramp services at no extra cost. To encourage adoption, PayPal has committed $20 million in incentives to strengthen the HYPE ecosystem.
Revenue Sharing and Compliance Framework
Paxos’ proposal includes a tiered rewards system in which revenue from USDH would be reinvested into Hyperliquid’s growth and its Assistance Fund until the stablecoin reaches a $1 billion total value locked (TVL) milestone. Even as TVL surpasses $5 billion, Paxos’ share of revenue would remain capped at 5%.
“Together, this framework ensures Paxos only wins if Hyperliquid wins, and USDH becomes the gateway stablecoin for global DeFi adoption,” the company said in its filing.
The firm also emphasized its regulatory readiness, citing compliance with the GENIUS Act and highlighting that it remains the only entity currently authorized to issue tokens across Europe. To bolster transparency and stability, Paxos said it would add PayPal’s existing PYUSD as part of USDH’s reserve assets.
Expanding Hyperliquid Beyond Retail
Looking beyond retail adoption, Paxos pitched a vision of positioning Hyperliquid as a liquidity hub for enterprises. The proposal outlined strategies to engage fintechs, brokerages, and asset issuers through Hyperliquid’s open market creation system (HIP-3) and its HyperEVM infrastructure. Paxos also plans to roll out an “Earn” product built on USDH for integration into consumer-facing apps.
The proposal builds on Paxos’ established track record, as it already provides stablecoin infrastructure for Stripe, Mastercard, Robinhood, Nubank, Mercado Libre, and Interactive Brokers.
Competitive Landscape
Paxos faces stiff competition in the race to issue USDH. Frax Finance has submitted a bid to back the stablecoin with its frxUSD, which is partially supported by BlackRock’s BUIDL fund. Another coalition—comprising Agora, Rain, and LayerZero—has pledged a 100% net revenue share while stressing its neutrality. Ethena Labs and Sky have also filed proposals.
Hyperliquid announced its search for a USDH issuer last week, with proposals due by September 10. Validators are expected to vote on the winning bid starting September 14, while the Hyperliquid Foundation has stated it will abstain from the decision.
