Paxos Promotes PayPal Partnership in Bid for Hyperliquid’s USDH Stablecoin

Paxos has modified its proposal in the competitive bid to secure the Hyperliquid USDH stablecoin, aiming to gain an edge over contenders like Ethena, Sky, LayerZero, and Agora.

Key Takeaways

Paxos’ Updated Proposal: Paxos has revised its strategy to enhance its position in the race for Hyperliquid’s USDH stablecoin.
Partnership with PayPal: A key element of the new proposal is a collaboration with PayPal, expected to broaden USDH's accessibility and reach.
Incentive Structure: Paxos has introduced a new rewards structure that aligns its benefits with the growth of USDH, committing to reinvest revenue until reaching $1 billion in Total Value Locked (TVL).
Global Scaling Focus: Paxos is uniquely positioned to issue stablecoins globally, particularly in Europe, where it holds regulatory approval.
Competitive Landscape: Other firms like Frax Finance and Ethena Labs are also competing for the USDH issuance, adding to the competition in the DeFi sector.

Paxos touts PayPal partnership in push to win Hyperliquid’s USDH stablecoin bid - 1

Main Content

Paxos has unveiled an upgraded version of its proposal in the competitive bidding process to become the issuer of Hyperliquid's USDH stablecoin. This refreshed offer includes strategic improvements aimed at bolstering Paxos’ position against other bidders while better serving the cryptocurrency community's demands.

A prominent highlight of this new proposal is Paxos' partnership with PayPal, which they believe will significantly enhance the global scale and accessibility of the USDH stablecoin. This collaboration involves listing the HYPE token on both PayPal and Venmo, which will enable USDH to offer free on/off-ramps and a substantial $20 million in ecosystem incentives.

According to Paxos, this alliance is pivotal for the adoption of USDH, leveraging PayPal's extensive user base of 400 million customers and 35 million merchants worldwide.

In addition, Paxos has restructured the incentive program for the USDH stablecoin. The updated model allows Paxos to benefit only when USDH grows. Specifically, Paxos will reinvest USDH revenues into Hyperliquid’s growth and Assistance Fund (AF) until the USDH achieves a Total Value Locked (TVL) of $1 billion. Only after surpassing this key milestone will Paxos take a capped revenue share of 5%. This strategy aligns Paxos’ success directly with the growth of Hyperliquid, demonstrating its commitment to sustainable scalability.

Moreover, the proposal emphasizes that USDH is set to become a crucial component in promoting global DeFi adoption, positioned as the gateway stablecoin for innovative financial products. This incentivizes both liquidity providers and businesses to engage with USDH, thereby broadening its ecosystem.

Paxos highlighted, “This framework ensures that Paxos only wins if Hyperliquid wins, positioning USDH as the go-to stablecoin for global DeFi adoption.”

A significant aspect of Paxos’ proposal is its focus on global expansion. Paxos claims to be the only stablecoin issuer legally poised for global operations, particularly in Europe, where no other competitor has obtained regulatory approval. This unique positioning could serve as a major advantage for Paxos, allowing the scaling of USDH without the compliance challenges that other competitors face.

Additionally, Paxos is working to enhance Hyperliquid’s liquidity infrastructure by collaborating with fintech companies and brokerages. This collaboration aims to integrate builder codes that will assist in onboarding new users effortlessly and enable personalized perpetual market pairs for USDH and various assets.

Paxos faces stiff competition in the race for USDH. Other contenders such as Frax Finance, Agora, Rain, LayerZero, Sky, and Ethena Labs are also pursuing this opportunity, each offering distinct incentives and support from key figures in the industry. Frax Finance, for instance, has proposed backing USDH with its frxUSD, which is supported by BlackRock’s BUIDL Fund. On the other hand, Ethena Labs has introduced a fully-backed USDH and has pledged to return 95% of net revenue to Hyperliquid.

As validators gear up to cast their votes on the winner beginning September 14, the competition for USDH issuance is shaping up to be one of the most eagerly awaited developments in the DeFi sector. Given the intense competition, the Hyperliquid community will face a challenging decision on which proposal best aligns with the long-term vision for USDH adoption and its broader ecosystem.