In the fast-paced world of blockchain and crypto, stablecoins are the unsung heroes that keep things steady amid the volatility. Recently, a tweet from The Rollup (@therollupco) caught the community's eye, featuring clips from an interview with Lorenzo R., Paxos Labs CEO and co-founder of USDTO. The discussion revolves around Paxos' proposal to issue USDH, Hyperliquid's upcoming native stablecoin.

Hyperliquid, a popular decentralized perpetuals exchange built on its own blockchain, is gearing up to launch USDH through a community validator vote. This move aims to slash trading fees by 80% and integrate a stable asset deeply into its ecosystem. Several heavyweights like Paxos, Frax, Agora, and even Ethena have thrown their hats in the ring with proposals.

What sets Paxos apart—and sparked some debate—is their offer to funnel 95% of USDH's yield into buybacks for HYPE, Hyperliquid's native token, rather than the 100% seen in competing bids. In the interview, host Andy from The Rollup presses Lorenzo on this point: why not go all-in like the others?

Lorenzo's response is refreshingly candid. He emphasizes that building a successful stablecoin isn't a walk in the park. "Making a stablecoin be successful is extremely hard," he says, drawing from Paxos' experience with assets like USDP and PayPal's PYUSD. He argues that issuers need "skin in the game" to stay committed long-term. Without some revenue retention, there's a risk the issuer might bail if things get tough.

He also touches on incentives for ecosystem integration. "People don't just flip their entire platform to something else overnight," Lorenzo notes. That 5% cut could fuel partnerships and drive faster adoption across platforms, ultimately benefiting the Hyperliquid community more than a full giveaway might.

Interestingly, Lorenzo isn't wedded to the initial structure. He's open to feedback, like directing more funds to an ecosystem fund, and plans to iterate on the proposal. Paxos also intends to buy HYPE tokens for their balance sheet, showing further alignment.

But Lorenzo goes deeper, challenging the yield-chasing mindset in crypto. "I am not a big fan of bringing the yield back to its users just because I am used to an ecosystem," he explains. Referencing USDT (Tether), the world's largest stablecoin, he points out that holders prioritize protection from hyperinflation—think 100-200% in some countries—over earning a modest 5% yield.

This perspective is crucial for meme token enthusiasts. Hyperliquid has become a hotspot for trading volatile assets, including memes, thanks to its high-speed, low-cost perps. A robust stablecoin like USDH could supercharge liquidity, making it easier to jump in and out of meme trades without slippage or high fees. But choosing the right issuer matters: do you want a battle-tested regulated entity like Paxos, even if it means a tiny revenue slice for them?

Community reactions are mixed. Some applaud Paxos' regulatory compliance and enterprise scale, which could attract institutional players and fintech giants. Others push back, favoring full revenue return to bootstrap growth. With competitors like Frax and Ethena offering 100% (and Ethena backing with their USDe synth), the validator vote will be one to watch.

For blockchain practitioners eyeing meme tokens, this saga highlights the interplay between stability and innovation. Stablecoins aren't just boring USD pegs—they're the foundation for wild rides in memecoins and beyond. Keep an eye on Hyperliquid's updates and Paxos' blog for the latest.

If you're trading memes on Hyperliquid, how do you feel about the USDH proposals? Drop your thoughts in the comments below!