The First Step
Paxos Labs USDH Proposal V2 delivers three major upgrades to unlock Hyperliquid at global scale:
- PayPal Partnership – HYPE listed on PayPal/Venmo, USDH free on/off-ramps, $20MM ecosystem incentives, and global payments integrations across Checkout, Braintree, Venmo, Hyperwallet, and Xoom.
- Revamped Rewards – Clear AF-first incentive structure with Paxos Labs only earning once TVL milestones are hit, capped at 5%, and all fees taken in HYPE tokens to directly align with the community.
- Global Scaling Initiatives – Paxos Labs will partner with Paxos, the only issuer positioned to legally issue stablecoins globally. No one else bidding can legally issue in Europe, full stop. Others claim to be GENIUS compliant, but are issuing from entities that hold only MTLs. Paxos is the only issuer in the world today that can ensure that USDH can scale globally in a fully compliant manner.
Together, this framework ensures Paxos Labs only wins if Hyperliquid wins, and USDH becomes the gateway stablecoin for global DeFi adoption.
The first 72 hours after our initial proposal was non-stop war rooming to respond to every message and address every concern we saw in the community. Since then, we’ve only doubled down. The Hyperliquid community gave us clear, valuable feedback–V2 is our answer. The message is simple: Paxos Labs unlocks Hyperliquid at global scale.
Our initial proposal outlined the differentiated distribution that the Paxos Labs network can deliver. Most critically, Paxos Labs has existing relationships with well-regulated stablecoin issuers that can be leveraged to achieve the community’s goals. Over the last 3 days, we have not only focused on the community’s feedback. but have begun to tangibly kickstart these distribution efforts. We’re proud to announce that in addition to partnering with Paxos as the issuer of regulated stablecoins that will back USDH, PayPal – longtime partner of Paxos – has committed to supporting the HyperLiquid ecosystem in the following ways.
- HYPE Token Listing: HYPE will be listed as a purchasable asset on PayPal and Venmo* (subject to regulator approvals)
- USDH support for free on/off ramps: USDH will be supported by PayPal’s seamless on/off ramp product and made available for free in all the countries it supports.
- Incentives: $20MM in incentives committed to the HYPE ecosystem by PayPal.
- Payments Integrations: Integration and support for USDH in PayPal Checkout and Braintree — PayPal’s branded and unbranded payment channels that customers use for payments. As part of this, they recently launched their Pay With Crypto solution, which will also include support for USDH and HYPE.
Integrations and support for USDH to:
- Venmo: The leading social payment network in the US with an emphasis on P2P transactions and merchant payments.
- Hyperwallet: PayPal’s global payout solution, which lets customers do mass payouts to contractors, freelancers, and sellers around the world.
- Xoom: The money remittance service which serves over 100 countries and millions of customers worldwide. They recently launched PYUSD settlement for more cost-effective distributions to partners.
Payments-first utility: Checkout with Crypto (users pay USDH; merchants see fiat), optional auto-settlement, batch payouts, and drop-in developer integrations.
Partnerships with established players like Paxos and PayPal can bring immense scale to the Hyperliquid ecosystem. PayPal is a global payments platform that processes $1T+ in TPV annually, with over 400 million users, and 35 million merchants. We’re thrilled to have PayPal as a partner from day one of USDH issuance, and add PYUSD as another of the GENIUS-compliant reserve assets issued by Paxos. Today, Paxos infrastructure powers some of the world’s leading platforms—for example, stablecoin payments for Stripe and Mastercard, stablecoin issuance for Robinhood and crypto trading for Nubank, Mercado Libre and Interactive Brokers. With V2, we are also further committing to a framework where Paxos Labs only wins if Hyperliquid wins. As USDH scales, revenue share compensating Paxos Labs only begins once the asset surpasses major growth milestones, and remains capped at 5% past $5B TVL. Until then, every dollar of yield is reinvested in growth and to the AF.
The Next Step: Driving Key Strategic Initiatives
In this section we lay out how Paxos Labs helps drive Hyperliquid’s key strategic initiatives at a global scale.
Hyperliquid as Liquidity Infrastructure – Bringing Builder Codes to Enterprises
Today, Hyperliquid operates as one of the best consumer frontends for crypto native traders. Its next step is to become the default liquidity infrastructure to provide seamless and cost efficient spot and perpetual trades across fintechs and brokerage platforms. Bootstrapping new user bases on multiple new exchanges from scratch cannot be the only way to onboard net new users into Hyperliquid.
Paxos Labs has the ability to materialize this vision of scaling frontend access to Hyperliquid by working with fintech enterprises and brokerages to incorporate builder codes. Enabling net new consumers to trade on Hyperliquid’s liquidity without needing to know the details about the order’s path or venue. Our mission is to grow DeFi to enterprise scale, and bring builder codes to enterprise platforms scaling perp dex trading to the rest of the world.
Hyperliquid’s Permissionless Market Creation – Bringing Asset Issuers to HIP-3
With HIP-3, Hyperliquid allows deployments of custom perpetual market pairs, allowing a new market created by asset issuers to gain access to the network of traders that exist on the orderbook.
While HIP-3 opens up the world to numerous perpetual pairs, permissionless listing isn’t enough – markets need demand and liquidity to succeed. Hyperliquid needs a strategy to scale quality asset listings on HIP-3.
Paxos Labs is the bridge to attract differentiated demand and attract trading liquidity. We can onboard tokenized asset issuers who are bringing coveted offchain assets onchain and are looking for access to instant liquidity and active traders, making Hyperliquid their destination of choice.
Hyperliquid’s Built-in Composability – Leveraging the EVM to Scale Access to DeFi
Due to its ability to interact with HyperCore, HyperEVM possesses the potential to become the most expressive DeFi ecosystem in crypto. In order to cement Hyperliquid’s position as the house of all finance, we must showcase the benefits of the HyperEVM, and most importantly, leverage those benefits to build best-in-class products that can onboard users at scale into the ecosystem.
This is why we are not stopping at crypto purchases. By partnering with Paxos to access its existing distribution network, Paxos Labs directive is to onboard net new users to the HyperEVM, enabling access to onchain lending markets, collateralized loans, and a proliferation of DeFi offerings on traditional platforms.
Paxos has also agreed to build an Earn product on top of USDH that can be embedded into any consumer frontend using a simple API suite, along with a suite of tokenized HLP products to support the growth of HIP-3 market deployers in their liquidity bootstrapping efforts. Paxos’s structured product issuance and Paxos Labs’ DeFi trading execution platform will bring together sophisticated money managers to create professional offerings that enable retail access to yield generated on HyperEVM.
Enabling Scale – Ask What Paxos Can Do For Hyperliquid
The mission of Paxos and Paxos Labs has been about taking people and businesses not only on the first step of their crypto journey, but making sure that we’re a part of their experience all the way to the end. With that mission in mind, Paxos Labs can leverage its relationship with Paxos to ensure deep liquidity for USDH migration from multiple stablecoins, including free minting from USDC, PYUSD, USDG, and all supported Paxos assets. Paxos Labs will also enable any enterprise the ability to launch credit/debit cards that accept USDH and the other structured products launched in the HyperEVM ecosystem as collateral.
Ecosystem Incentive Strategy
Ecosystem incentives will be driven towards partners and platforms that drive the growth of USDH. The Paxos Labs team has been working with all key ecosystem partners across builder code exchanges, HIP3 deployers, as well as asset issuers, paving the road for the best asset issuers to create perp trading pairs, driving greater demand and volume to the exchange and HyperEVM.
HIP-1 and HIP-3 Deployers: Deployers of spot and perp markets with USDH as the quote asset will be incentivized to entrench USDH as the go-to quote assets on spot markets, cementing it as the most liquid quote asset between HIP3 exchanges.
HyperEVM Protocols: Incentivizing LP pairs with USDH to tighten HyperCore <> HyperEVM pegs and USDH lender liquidity, lowering the overall cost of capital for loans to encourage USDH utilization. The incentives serve to cement USDH liquidity between HyperCore spot/perp as well as the EVM DEXs to offer a more unified liquidity experience for Hyperliquid users.
Enterprise Distributors: Fintech enterprises with large end-user distribution that onramp users from fiat or other stablecoins hold billions of dollars as on-platform balance waiting to be monetized and converted into stablecoins that become composable with the DeFi ecosystem. Incentivizing the enterprise platforms to convert fiat to USDH will unlock the next set of future Hyperliquid users, with the stablecoin acting as the gateway to onboarding the masses onchain.
In the short-term this will act as a firehose of incentives in a rapid growth strategy, with a long-term focus of entrenching USDH adoption with sustainable AF growth to ensure that value permanently accrues to HYPE holders.
Revised Reward Structure
The community asked for two more things: more clarity on the incentive structure and a clear path to driving value to the AF.
Paxos Labs will deliver both: The new framework starts with an AF pledge at 20% which increases based on TVL milestones. During initial phases, the ample ecosystem incentives enable the USDH yield to bootstrap liquidity and integrations across markets. The ecosystem incentives taper off as USDH TVL grows, reaches escape velocity and achieves network effects.
In turn, more yield is sent to the AF as USDH TVL grows, driving even higher buyback revenue to HYPE holders as the USDH flywheel expands. Paxos Labs takes nothing until we reach $1B in TVL and stays capped at 5% post $5B TVL. Any fees earned by Paxos Labs through this milestone will be held in HYPE tokens.
However, this is just the beginning. As the USDH governance procedure has shown, the Hyperliquid community governance is strong and has the potential to revive decentralized governance on key protocol mechanisms. At each milestone, we will hold a governance vote via the Hyperliquid validators on whether to amend or revise the next proposed milestone’s distribution structure. This allows the community to set expectations on specific numbers from the beginning, with room to amend it as USDH grows and more information becomes available.
*fees in practice will be set via a fixed rate as closely approximate to the proportions outlined above at current rates.
From Day-One Builders to Unlocking Global Scale
The Foundation called for a Hyperliquid-native, Hyperliquid-first, and compliant stablecoin.
No other team can attest to having been a part of the community long before the airdrop and having shipped and maintained tangible products from the very genesis of the HyperEVM. Paxos Labs is uniquely equipped with the Hyperliquid native builders’ ethos with a strong connectivity to an entirely new consumer base. We are here to use it to grow USDH into a top stablecoin and unlock Hyperliquid’s next phase of growth.
All of finance will come onchain, and our belief is that this transition will happen in the Hyperliquid ecosystem. It will start with USDH, but we will eventually turn Hyperliquid into a cornerstone of the global financial market.
Important Disclosures
This press release is for informational purposes only and is not intended as financial, investment, or other advice. The use and exchange of digital assets, including stablecoins such as PYUSD, may involve complex risks, including but not limited to:
Network & Custody Risks: Transactions on blockchains – and the blockchains themselves – are subject to a range of operational, technological, and security risks. Users are responsible for safeguarding their private keys and/or working with reputable custodians/wallet providers; loss of access may lead to the permanent loss of funds.
Third-Party Reliance: Digital assets rely on third-party blockchain software and network infrastructure. Neither PayPal nor Paxos Trust Company, LLC (“Paxos”) has control over blockchain networks and is not liable for any blockchain’s performance, security, or ongoing availability.
Redemption and Market Risk of Fiat-Backed Stablecoins: U.S. dollar-backed stablecoins that are regulated by the New York State Department of Financial Services, are designed to maintain a stable value of one U.S. dollar per token. Individuals or entities with direct redemption access via PayPal, Paxos or authorized partners are guaranteed to convert PYUSD 1:1 for US dollars. All other parties may be limited to selling PYUSD at market prices.
Regulatory Uncertainty: Regulatory frameworks for digital assets are evolving. Availability or legality of digital asset services may change without notice, and services may be restricted, suspended, or terminated in certain jurisdictions as required by law or regulation.
No FDIC/SIPC Protection: Digital assets, including PYUSD, are not insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).
Terms & Conditions: Use of PYUSD is subject to Paxos and PayPal’s Terms & Conditions, including disclaimers on liability and user responsibilities. Transactions are irreversible once recorded on the blockchain. You are advised to review and understand all applicable terms.
Service Availability & Illegal Activity: PYUSD and related payment services may be suspended or terminated due to events or investigations involving illegal activity, system failure, or other factors beyond PayPal’s control.
Forward-Looking Statements: Statements in this press release regarding potential product features, expansion plans, and regulatory outcomes are forward-looking and subject to change. Actual results may differ materially due to known and unknown risks, uncertainties, and other factors.
Any materially new product or service requires approval from the New York State Department of Financial Services (NYDFS). As of Sept 10, 2025, the NYDFS has not provided any such approval.