Two big companies are now fighting hard for a valuable crypto contract. PayPal just joined forces with Paxos Labs to win the right to create Hyperliquid’s USDH stablecoin.
Paxos announced their new offer and they brought PayPal’s power with them. PayPal promises to add USDH directly to their payment system, making it easier for millions of businesses to use it.
PayPal will also list Hyperliquid’s HYPE token on all their platforms and spend $20 million to support the project. They’re bringing in Venmo and Xoom too, giving them way more reach than their competitors.
“PayPal has committed to supporting the Hyperliquid ecosystem,” Paxos said. This shows that big financial companies now want to work with decentralized crypto projects.
Revolutionary Revenue Model Aligns Interests
Paxos has designed an incentive structure that challenges traditional stablecoin models. The firm will forgo all revenue until USDH surpasses $1 billion in total value locked (TVL), after which its earnings will be capped at 5% — even beyond $5 billion in TVL— ensuring long-term alignment with Hyperliquid’s growth.
This milestone-based approach reverses traditional stablecoin economics. While competitors typically extract fees from day one, Paxos will reinvest everything into Hyperliquid’s Assistance Fund — the protocol’s treasury that market-buys HYPE tokens.
“Paxos only wins if Hyperliquid wins,” the company emphasized, holding earned fees in HYPE tokens to demonstrate skin-in-the-game commitment.
Enterprise Vision Targets Institutional Adoption
Paxos isn’t just focusing on everyday shoppers and payments. It wants to turn Hyperliquid into a powerful tool for big businesses and investors to handle large-scale money flows. The company plans to use its current ties with companies like Stripe, Mastercard, and Interactive Brokers to bring in these major players.
Paxos also plans to create a simple “Earn” feature with USDH, where users can make money on their holdings, and invite other companies to list their assets on Hyperliquid’s easy-to-use trading marketplace. This business-friendly approach makes Paxos stand out from rivals who mainly target regular crypto users.
Regulatory Arsenal Provides An Edge To Paxos
Paxos wields unique regulatory advantages in the intensifying competition. The company claims exclusive legal authority to issue tokens in Europe, potentially unlocking massive continental markets for USDH.
Furthermore, Paxos is making its USDH stablecoin for Hyperliquid extra trustworthy by following strict U.S. rules, like the GENIUS Act, and using PayPal’s PYUSD as part of its backing. This strong focus on playing by the rules could give USDH a big advantage as governments around the world get tougher on stablecoins.
Battle Lines Drawn Among Industry Titans
Paxos is no longer the sole contender providing a comprehensive package of services for USDH, as multiple major players compete to issue Hyperliquid’s native stablecoin. For example, Frax Finance proposes backing USDH with its frxUSD, supported by BlackRock’s BUIDL fund, while a coalition led by Agora with Rain and LayerZero commits to 100% revenue sharing.
Additional bids have come from Ethena Labs and Sky, making this the most competitive stablecoin issuer selection in DeFi history. Hyperliquid validators will begin voting on September 14, with the Foundation abstaining to maintain neutrality.
The outcome will determine whether traditional finance giants like PayPal can successfully penetrate DeFi’s core infrastructure or if native crypto protocols maintain control over emerging financial rails.
