Paxos has made changes to its previous proposal in the ongoing bid for Hyperliquid’s USDH stablecoin. This new offer might give it a competitive edge over the likes of Ethena, Sky, LayerZero, Agora.
Summary
- Paxos has updated its proposal for Hyperliquid’s USDH stablecoin with key strategic enhancements, including a PayPal partnership to support USDH’s global adoption.
- Paxos commits to reinvesting USDH revenue into Hyperliquid’s growth until it hits $1 billion in TVL, with its revenue share capped at 5% post-$5 billion.
- Paxos plans to integrate USDH with major fintech enterprises and brokerages to scale liquidity infrastructure, helping Hyperliquid expand into the enterprise space.
- Other competitors like Ethena, Sky, LayerZero, Agora have also submitted with voting expected to start September 14.
Stablecoin issuer Paxos has rolled out an updated version of its proposal in the ongoing competitive bidding process to house Hyperliquid’s USDH stablecoin. This latest revision comes with strategic enhancements, designed to strengthen Paxos’ position against other contenders and to better align with the community’s needs.
USDH bid: Paxos pushes PayPal, Venmo integration
The updated proposal introduces a key partnership with PayPal, which Paxos believes will enhance the global scale and accessibility of the USDH stablecoin. This collaboration, which includes the listing of the HYPE token on PayPal and Venmo, will offer USDH support for free on/off-ramps and $20 million in ecosystem incentives.
Paxos claims this alliance will play a critical role in supporting USDH’s adoption, leveraging PayPal’s vast user base of 400 million customers and 35 million merchants globally.
In addition to the PayPal partnership, Paxos has revamped the rewards structure for the USDH stablecoin. The new incentive system ensures that Paxos only benefits when USDH scales. Under the plan, Paxos will reinvest USDH revenue into Hyperliquid’s growth and Assistance Fund (AF) until USDH reaches $1 billion in Total Value Locked (TVL).
Only after surpassing this threshold will Paxos take a capped 5% revenue share. This approach directly aligns Paxos’ success with Hyperliquid’s growth, reinforcing its commitment to long-term scalability.
The proposal noted that USDH will play a major role in global DeFi adoption, serving as the gateway stablecoin to a new era of financial products. This incentivizes both liquidity providers and enterprises to use USDH, further expanding its ecosystem.
“Together, this framework ensures Paxos only wins if Hyperliquid wins, and USDH becomes the gateway stablecoin for global DeFi adoption,” Paxos stated.
Global scaling, legal compliance, and liquidity infrastructure
Another major feature of Paxos’ proposal is the focus on global scaling. According to the company, Paxos is the only issuer legally positioned to issue stablecoins globally, especially in Europe, where no other competitor has regulatory approval for such operations. This might be a major differentiator for Paxos, as it provides an immediate advantage in scaling USDH globally without the compliance hurdles faced by other competitors.
Furthermore, Paxos is taking steps to enhance Hyperliquid’s liquidity infrastructure by working with fintech enterprises and brokerages to integrate builder codes, which will enable the seamless onboarding of new users and facilitate custom perpetual market pairs for USDH and other assets.
Paxos is not alone in the race to house USDH. Competitors such as Frax Finance, Agora, Rain, LayerZero, Sky, and Ethena Labs are all vying for the position, with each offering varying incentives and backing from key industry players. Frax Finance, for instance, has proposed backing USDH with its frxUSD, supported by BlackRock’s BUIDL Fund.
Ethena Labs floated a fully-backed USDH with a commitment to return 95% of net revenue to Hyperliquid. As validators prepare to vote on the winner starting September 14, the race for USDH issuance remains one of the most highly anticipated developments in the DeFi space. With this fierce competition, the Hyperliquid community might have a tough time deciding which proposal will best serve the long-term goals of USDH adoption and ecosystem at large.