Hyperliquid, a decentralized exchange and layer-1 blockchain, has announced plans to issue its own stablecoin, USDH. Big players, including Paxos, Frax Finance, and a coalition led by LayerZero, are competing for the opportunity.
Paxos: The Regulatory Heavyweight
Paxos presents a compliance-focused proposal emphasizing regulatory adherence. With a track record of working with PayPal and Binance, the company suggests allocating 95% of USDH reserves to buy back HYPE, generating additional value for validators and users.
CITE_W_A: "72 hours. Every comment read and concern addressed."
Additionally, Paxos aims to integrate USDH into PayPal and Venmo, supported by $20 million in incentives for ecosystem growth.
Frax Finance: Community-Centric Approach
Frax Finance proposes a community-first model, backing USDH 1:1 with frxUSD using BlackRock's BUIDL treasury fund. All Treasury earnings will be distributed among Hyperliquid users via automated smart contracts, appealing to those who value decentralization and fairness.
LayerZero & Agora: Interoperability Innovators
The coalition of LayerZero, Agora, and Rain focuses on interoperability and neutrality, reducing bridge risks and ensuring seamless cross-chain functionality. They plan to return 100% of net revenue to Hyperliquid's Assistance Fund or HYPE buybacks, though the discussion of net revenue raises questions about potential deductions.
Hyperliquid's stablecoin decision centers around three distinct visions: Paxos's regulatory strength, Frax's community-driven approach, and LayerZero's interoperability-first premise. The results could reshape the stablecoin landscape in decentralized finance.
