Stablecoin issuer Paxos updated its proposal (Version 2) to issue USDH, the native stablecoin for the decentralized exchange (DEX) Hyperliquid. This update prominently features public support from PayPal, marking a significant endorsement that integrates USDH into PayPal’s ecosystem.
PayPal, with over 400 million users and 35 million merchants, has committed to listing Hyperliquid’s native HYPE token on its platform and Venmo, providing free on/off-ramps for USDH, and enabling its use in PayPal Checkout. Additionally, PayPal pledged $20 million in incentives to boost the Hyperliquid ecosystem, including integrations with Venmo, Xoom (for remittances), Braintree, and Hyperwallet.
This partnership positions USDH as a compliant, globally scalable stablecoin, backed by tokenized Treasuries and PayPal’s own PYUSD as a reserve asset. Paxos emphasized its regulatory compliance under the GENIUS Act and EU standards, allowing USDH to operate across jurisdictions.
PayPal’s stablecoin strategy centers on PYUSD, a USD-pegged cryptocurrency launched in 2023 and issued by Paxos. Fully backed by U.S. dollar deposits, short-term Treasuries, and cash equivalents, PYUSD enables seamless integration of fiat and digital currencies within PayPal and Venmo ecosystems.
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The company aims to transform payments by facilitating fast, low-cost transfers, remittances, and Web3 transactions, while bridging traditional finance and blockchain.
Key expansions include a 3.7% yield on holdings to boost adoption, launches on Ethereum and Stellar blockchains for cross-border efficiency, and enabling merchants to accept over 100 cryptocurrencies converted to PYUSD.
The Hyperliquid revenue model is community-aligned: Paxos takes no fees until USDH reaches $1 billion in total value locked (TVL), then caps its share at 5% beyond $5 billion, with all early revenue reinvested into Hyperliquid’s growth and Assistance Fund.
The announcement has sparked excitement in the crypto community, with discussions highlighting it as a bridge between traditional fintech and DeFi. Hyperliquid, already processing over $330 billion in monthly volume, could see massive adoption through this integration.
Native Markets Extends Lead to 93% Odds on Polymarket
In the competitive race to issue USDH—Hyperliquid’s validators will ultimately decide via governance vote—prediction market Polymarket shows Native Markets as the overwhelming favorite.
Traders are betting on a 93% probability that Native Markets will win the bid, up from 91% earlier in the week. The market has seen over $1 million in trading volume, reflecting strong sentiment.
Native Markets, co-founded by an early Hyperliquid backer, proposes innovations like synthetic dollar instruments (e.g., hUSDe), USDe-linked savings, card spending solutions, reward-bearing collateral, and modular prime broking.
These features aim to hedge flows on Hyperliquid and enhance its HIP-3 market designs. The project’s “native” focus on Hyperliquid has resonated, especially after Ethena Labs withdrew its bid on September 12, citing community feedback that it wasn’t sufficiently tied to the ecosystem.
Other contenders include Paxos (now bolstered by PayPal), Frax Finance (proposing zero take rate and backing with frxUSD via BlackRock’s BUIDL Fund), Agora, Rain, MoonPay, Sky, and LayerZero. Despite Paxos’ high-profile update, Polymarket odds favor Native Markets, suggesting traders prioritize ecosystem nativity over external partnerships.
The vote outcome could reshape Hyperliquid’s growth, with USDH intended to replace USDT and USDC as the platform’s default stablecoin for spot and perpetual trading. This dual development underscores the high stakes in Hyperliquid’s stablecoin launch, blending mainstream finance with DeFi innovation. The final validator vote will determine USDH’s issuer, potentially influencing billions in trading volume.
Meanwhile. Gemini has gone public:
Gemini Space Station shares increased as much as 64% Friday after the crypto exchange founded by brothers Tyler and Cameron Winklevoss in 2014 raised $425 million in an initial public offering amid a busy week for IPOs. In an unusual move, the company decided to limit pricing ahead of its market debut, after first targeting $433.3 million. Investor demand for crypto-linked companies has surged, as seen in recent listings by digital lender Figure and crypto firm Circle.