Blockchain infrastructure and tokenization provider Paxos announced an update to the USDH Proposal V2, which is designed to scale Hyperliquid globally. The original framework emphasized the distinctive distribution model available through the Paxos network. Since the initial version was published three days ago, the organization has reviewed community feedback while simultaneously initiating distribution activities. As part of this progress, PayPal has agreed to support the Hyperliquid ecosystem.
HYPE will become available as a purchasable asset through PayPal and Venmo, pending regulatory clearance. USDH will be integrated into PayPal’s on/off ramp services at no cost in supported regions. Additionally, $20 million in incentives have been allocated to strengthen the HYPE ecosystem. PayPal Checkout and Braintree will integrate USDH into their branded and unbranded payment channels, including the Pay With Crypto solution, which will support both USDH and HYPE.
Further integrations will extend USDH to Venmo, Hyperwallet, and Xoom. Venmo will enable peer-to-peer and merchant payments, Hyperwallet will support international mass payouts, and Xoom will provide cost-efficient cross-border remittances in more than 100 countries, building on its recent PYUSD settlement option. Core payment utilities will include Checkout with Crypto, auto-settlement features, batch payouts, and developer-friendly integrations.
With over $1 trillion in annual total payment volume, more than 400 million users, and 35 million merchants, PayPal brings significant scale to the Hyperliquid ecosystem. From the outset of USDH issuance, PYUSD will join other GENIUS-compliant reserve assets. The goal is to broaden distribution opportunities and extend global reach. Paxos infrastructure already supports leading platforms such as Stripe, Mastercard, Robinhood, Nubank, Mercado Libre, and Interactive Brokers through stablecoin issuance and payments solutions.
The long-term success of Paxos is tied to the growth of Hyperliquid. Revenue sharing for Paxos only commences once USDH achieves key adoption milestones, with compensation capped at 5% after surpassing $5 billion in total value locked. Until that point, all yield is directed toward ecosystem expansion and development.
Hyperliquid currently functions as a leading trading interface for crypto-native users, with its next phase focused on becoming the core liquidity infrastructure for seamless and efficient spot and perpetual trading across brokerages and fintech platforms. Expanding solely by launching exchanges from scratch is not sufficient to scale adoption. Paxos provides a pathway to expand access by working with enterprises and brokerages to integrate builder codes, allowing new users to trade on Hyperliquid’s liquidity without needing to understand the mechanics of order routing.
Paxos already supports brokerage infrastructure for global enterprises, enabling crypto purchases within their platforms. Both HYPE and USDH will be integrated into this framework, broadening access from the outset and linking builder codes to incoming order flow from distribution partners. The objective is to scale decentralized trading infrastructure to enterprise level and extend it globally.
HIP-3 introduces the ability to launch custom perpetual market pairs, enabling asset issuers to connect directly with active traders through Hyperliquid’s orderbook. However, permissionless listings alone are not enough, as demand and liquidity remain critical for success. Paxos serves as a bridge to attract tokenized asset issuers who want to bring traditional assets onchain, offering them direct access to liquidity and market participants.
By interacting with HyperCore, HyperEVM has the potential to establish itself as one of the most advanced ecosystems in decentralized finance. To solidify Hyperliquid’s role as a central financial hub, the benefits of HyperEVM must be demonstrated through scalable, user-focused products. Paxos plans to use its distribution network to onboard new participants into HyperEVM, giving access to onchain lending, collateralized borrowing, and a broader range of DeFi services.
To support this growth, Paxos will introduce an Earn product on USDH that can be embedded into consumer platforms via API, along with tokenized HLP products to help HIP-3 market deployers build liquidity. Its structured product issuance and DeFi execution platform will connect professional money managers with retail users, creating accessible yield opportunities within HyperEVM.
Paxos aims to facilitate migration into USDH from multiple stablecoins with deep liquidity, offering free minting from assets such as USDC, PYUSD, and USDG. In addition, enterprises will be able to issue credit or debit cards backed by USDH and other structured products developed within the HyperEVM ecosystem.
Incentives across the ecosystem will be directed toward partners and platforms that expand the adoption of USDH. Paxos Labs is coordinating with builder code exchanges, HIP-3 deployers, and asset issuers to create perpetual trading pairs and drive liquidity and demand within Hyperliquid and HyperEVM. Deployers of spot and perpetual markets that use USDH as the quote asset will receive incentives to establish it as the preferred base for trading activity across HIP-3 exchanges.
Within HyperEVM, incentives will support liquidity provision in USDH pairs to strengthen the peg between HyperCore and HyperEVM, improve lending liquidity, and reduce borrowing costs, ultimately encouraging wider use of USDH. Fintech enterprises with large user bases that convert fiat balances or other stablecoins into USDH will also be incentivized, positioning the stablecoin as a primary entry point for mainstream users moving onchain.
In the near term, this strategy functions as an aggressive growth initiative, while the long-term goal is to secure sustainable adoption, ensuring lasting value creation within the ecosystem and accruing benefits to HYPE holders.
The community requested greater transparency on incentives and a clear path for channeling value to the AF. The revised framework addresses both points by starting with a 20% AF pledge that increases alongside TVL milestones. In the early stages, ecosystem incentives help bootstrap liquidity and integrations across markets, while these incentives gradually taper as USDH achieves scale and network effects. As TVL grows, a larger share of yield flows to the AF, increasing buyback revenue for HYPE holders and reinforcing the USDH growth cycle. Paxos does not take fees until $1B in TVL is reached, and compensation remains capped at 5% beyond $5B, with any earnings held in HYPE tokens.
This structure is only the starting point. Governance through Hyperliquid validators ensures that at each milestone, the community can vote on adjustments to the distribution model. This provides clear expectations from the outset while maintaining flexibility as USDH matures.
The Foundation emphasized the need for a compliant, Hyperliquid-native stablecoin, and USDH fulfills this mandate. Built by contributors with deep roots in the ecosystem since the launch of HyperEVM, the project combines community alignment with the ability to reach new users. The vision is to establish USDH as a leading stablecoin and position Hyperliquid as a central hub for global onchain finance. The transition begins with USDH but is intended to evolve into a foundation for the broader financial system.
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