Paxos Labs has released a revamped proposal to issue Hyperliquid’s forthcoming USDH stablecoin, putting forward a global strategy that includes a major integration with PayPal.

Key Takeaways:

• Paxos plans to integrate USDH with PayPal and Venmo, enabling seamless payments and zero-cost on/off-ramps.

• All revenue from USDH will be reinvested until $1B TVL, with Paxos capping its share at 5% even after $5B.

• Paxos faces strong competition from Frax, Agora, LayerZero, and others, as Hyperliquid validators prepare to vote on September 14.

The updated pitch comes amid intense competition, with several top-tier players vying for the role of official issuer.

Unveiled Tuesday, Paxos’ Version 2 proposal outlines a broad plan to scale USDH adoption.

Paxos Proposes USDH Integration Into PayPal Checkout

At the core of the strategy is a partnership with PayPal, which would see USDH integrated into PayPal’s checkout and payment infrastructure.

The move also includes Venmo support and listing of Hyperliquid’s native HYPE token. Notably, the integration would enable PayPal’s on/off-ramps to support USDH at zero cost.

PayPal is also committing $20 million in incentives to help grow the Hyperliquid ecosystem.

To align incentives, Paxos proposed that all revenue from USDH will be reinvested into Hyperliquid’s growth and its Assistance Fund until USDH hits a $1 billion TVL milestone.

Even beyond that, Paxos will cap its revenue share at 5%, even as TVL exceeds $5 billion.

“Together, this framework ensures Paxos only wins if Hyperliquid wins,” the proposal stated, adding that it intends to position USDH as the default stablecoin for DeFi.

Paxos also emphasized its regulatory credentials, pointing to its compliance with the GENIUS Act and its legal status as the only firm currently able to issue tokens in Europe.

It plans to include PayPal’s PYUSD as a reserve asset to bolster USDH’s legal and financial foundation.

Looking beyond retail users, Paxos is pitching Hyperliquid as a liquidity layer for enterprise-grade finance. It plans to integrate builder codes through partnerships with brokerages and fintech firms, attract asset issuers into Hyperliquid’s HIP-3 open market, and build an “Earn” product using USDH for consumer apps.

The proposal also aims to leverage HyperEVM for deeper DeFi integration.

Paxos’ offer is one among several. Frax Finance proposed backing USDH with frxUSD, supported by BlackRock’s BUIDL fund.

Another consortium, comprising Agora, Rain, and LayerZero, is pledging a full net revenue share and claims neutrality. Proposals from Ethena Labs and Sky are also in the mix.