Stablecoin issuer Paxos has unveiled an updated proposal in the competitive race to manage Hyperliquid’s USDH stablecoin. The revised plan introduces strategic enhancements aimed at strengthening Paxos’ position against rivals such as Ethena, Sky, LayerZero, and Agora, while aligning more closely with the community’s priorities.
PayPal and Venmo Integration at the Core of USDH Proposal
A centerpiece of Paxos’ new offer is a partnership with PayPal, which the company believes will boost the global reach and accessibility of USDH. The collaboration includes listing the HYPE token on PayPal and Venmo, providing USDH users with free on/off-ramps, and offering $20 million in ecosystem incentives.
Paxos argues that this alliance will be pivotal in driving USDH adoption, leveraging PayPal’s 400 million users and 35 million merchants worldwide.
Alongside the PayPal partnership, Paxos has overhauled the USDH rewards structure. The updated incentive plan ensures Paxos benefits only as USDH scales. Revenue generated from USDH will be reinvested into Hyperliquid’s growth and Assistance Fund (AF) until USDH reaches $1 billion in Total Value Locked (TVL). After reaching this milestone, Paxos will take a capped 5% revenue share, directly aligning its success with the growth of USDH.
“Together, this framework ensures Paxos only wins if Hyperliquid wins, positioning USDH as the gateway stablecoin for global DeFi adoption,” Paxos said.
Focus on Global Expansion, Compliance, and Liquidity Infrastructure
Paxos’ proposal also emphasizes global scaling. The company notes that it is currently the only issuer legally authorized to issue stablecoins across major markets, including Europe—a potential edge over competitors who face regulatory hurdles.
To further strengthen USDH’s ecosystem, Paxos is enhancing Hyperliquid’s liquidity infrastructure. The company plans to collaborate with fintech firms and brokerages to integrate builder codes, enabling seamless onboarding for new users and facilitating custom perpetual market pairs for USDH and other assets.
The Competitive Landscape
Paxos faces stiff competition from Frax Finance, Agora, Rain, LayerZero, Sky, and Ethena Labs, each presenting different incentives and strategic backing. Frax Finance, for example, has proposed supporting USDH with its frxUSD, backed by BlackRock’s BUIDL Fund. Ethena Labs offered a fully-backed USDH with a commitment to return 95% of net revenue to Hyperliquid.
Validators are set to vote on the winning proposal starting September 14, making the USDH issuance decision one of the most closely watched developments in DeFi. With multiple strong contenders, the Hyperliquid community faces a challenging choice in selecting the proposal best positioned to drive long-term USDH adoption and ecosystem growth.
