Paxos Unveils USDH Proposal V2 with PayPal/Venmo Support, $20M Incentives & Performance-Based Revenue Model
Paxos, the regulated issuer behind BUSD among other digital assets, has launched Proposal V2 for its new USDH stablecoin, introducing key enhancements aimed at scaling adoption and embedding economic incentives.
Highlights of USDH Proposal V2
1. PayPal and Venmo Integration
- The HYPE token will be available for purchase via PayPal and Venmo (pending regulatory approval).
- USDH will be supported as a free fiat on/off-ramp, enabling seamless stability rails via PayPal’s infrastructure.
2. $20 Million Ecosystem Incentive
- A $20 million incentive pool will help bootstrap the HYPE ecosystem and stimulate participation.
3. Pay-for-Performance Revenue Model
- Paxos will only begin retaining revenue once USDH’s Total Value Locked (TVL) exceeds $1 billion, with revenue capped at 5%.
- All fees will be settled in HYPE tokens, further aligning incentives with ecosystem performance.
4. Global Regulatory Expansion
- As a legally authorized stablecoin issuer, Paxos is poised to issue USDH in regulated global markets, including Europe (MiCA-compliant), facilitating institutional-grade expansion.
Why It Matters
- Mainstream Access: Integration with high-volume platforms like PayPal and Venmo positions USDH as a convenient, regulated gateway for crypto and DeFi engagement.
- Aligned Economic Architecture: Delaying Paxos’s revenue and paying fees in HYPE tokens create stronger alignment between protocol success and issuer incentives.
- Regulatory Innovation: Designed for compliant issuance across global jurisdictions, USDH could set a new standard for regulated stablecoins tailored for DeFi ecosystems.
Context: USDH & Hyperliquid Governance Landscape
- Hyperliquid launched a bidding process for USDH issuance rights, with institutional players like Paxos, Frax, and Agora competing. A validator vote is expected on Sept. 14, following proposal submissions by Sept. 10.
- Paxos’s earlier USDH pitch proposed allocating 95% of reserve interest income to HYPE token buybacks, with repurchased tokens redistributed to validators, users, and partners.
Summary Table
| Feature | Details |
|---|---|
| Platform Integration | PayPal & Venmo support for HYPE and USDH on/off-ramps |
| Ecosystem Incentive | $20 million allocated for rollout and growth |
| Revenue Structure | Fees start post–$1B TVL, capped at 5%; paid in HYPE |
| Regulatory Compliance | Suitable for issuance in compliant regions (e.g., Europe) |
| Governance Status | Decision pending in Hyperliquid validator vote on Sept.14 |
What’s Next
- Validator Decision (Sept. 14): Will Paxos’s Proposal V2 gain approval? Outcome will determine the stablecoin’s official issuance path.
- Platform Activation: Assuming regulatory green lights, HYPE and USDH availability on PayPal and Venmo are key for mainstream adoption.
- Ecosystem Growth: With fee incentives and revenue alignment, uptake of USDH and HYPE may accelerate depending on liquidity and integrator support.
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