Paxos and Frax Finance Compete to Issue Hyperliquid‘s Native USDH Stablecoin
NEW YORK – Hyperliquid, a leading decentralized exchange (DEX), is evaluating proposals from Paxos and Frax Finance to issue its native stablecoin, USDH, according to recent submissions and announcements. The competition highlights growing demand for stablecoin infrastructure tailored to high-performance trading environments.
The move to launch a native stablecoin aims to enhance Hyperliquid’s user experience and capital efficiency. A dedicated stablecoin would streamline trading, reduce slippage, and potentially unlock new features within the platform. The selection of an issuer will significantly impact USDH’s backing, yield distribution, and cross-chain capabilities, affecting Hyperliquid’s 40,000+ users and its position within the competitive DeFi landscape.
Frax Finance positioned its proposal as entirely community-driven, offering to back USDH on a one-to-one basis with its own frxUSD alongside U.S. Treasury securities managed by asset managers like BlackRock. Frax also proposed seamless redemption across frxUSD, USDC, USDT, and fiat currencies. notably,Frax committed to distributing 100% of the yield from the treasury holdings directly to Hyperliquid users through on-chain mechanisms.
“Hyper-performant chains deserve high-performance stablecoins,” Frax Finance stated in a September 6, 2025, post on X (formerly Twitter). “That’s why we submitted a proposal to issue @HyperliquidX’s stablecoin $USDH natively… 100% of the underlying yield to the HL community to keep building. when you build the best product, everyone wins.”
Frax further emphasized its existing multichain infrastructure, connecting over 20 networks, which would provide USDH with cross-chain functionality while remaining native to Hyperliquid. Hyperliquid governance would retain ultimate authority over USDH,with the power to alter the stablecoin’s framework regardless of the issuer.
Paxos’s proposal details were not publicly available at the time of publication, but the firm is known for its existing stablecoin infrastructure and regulatory compliance.The final decision rests with hyperliquid governance, which will weigh the proposals based on factors including security, transparency, and alignment with the platform’s long-term vision.
