Paxos is making waves in the crypto industry with a proposal to launch USDH, a Hyperliquid-first stablecoin designed to comply with both the U.S. GENIUS Act and Europe’s MiCA regulatory frameworks. The stablecoin would allocate 95% of the yield from its reserves toward buying back Hyperliquid’s native token HYPE, with redistributed rewards flowing to users, validators, and partner protocols.

The initiative will be spearheaded by Paxos Labs, a newly formed entity within Paxos, which recently acquired Molecular Labs, the developer behind Hyperliquid’s core primitives LHYPE and WHLP. This move strengthens Paxos’s grasp of Hyperliquid’s on-chain financial infrastructure, positioning it to launch USDH across both HyperEVM and HyperCore chains.

According to Paxos, USDH aims to bridge Hyperliquid to the traditional finance world by connecting institutional investors and mainstream fintechs to global banking rails with clear regulatory backing. The company, which already partners with more than 70 major financial institutions across the U.S., EU, Singapore, Abu Dhabi, and Latin America, plans to leverage its existing infrastructure to scale USDH worldwide.

The proposal also introduces a unique rewards system, where most of the interest from USDH reserves will be funneled into HYPE buybacks. This mechanism is expected to drive value back into the Hyperliquid ecosystem, directly rewarding developers, validators, and active users. Beyond stablecoin adoption, Paxos revealed it will integrate HYPE into its broader brokerage infrastructure, which already powers crypto services for global giants such as PayPal, Venmo, and MercadoLibre.

Hyperliquid has quickly risen to dominance in decentralized perpetual futures trading, generating over $106 million in revenue last month from nearly $400 billion in trading volume. With a commanding 70% share of the decentralized perp market, Hyperliquid trails only Uniswap and PancakeSwap in weekly trading activity, highlighting its powerful position as Paxos sets the stage for USDH.