Hyperliquid’s USDC Deal Could Squeeze Circle, Coinbase Margins, Boost HYPE

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Hyperliquid’s USDC deal could supercharge <a href="https://jpyeur.com/hype-usd/">HYPE</a>, pressure Circle, Coinbase margins, analysts sayMarkets

What to know:

  • Hyperliquid’s new USDC arrangement with Coinbase and Circle lets the protocol capture most reserve income generated by stablecoin deposits on the platform.
  • Analysts say the deal could create significant long-term buying pressure for HYPE as revenue shifts from trading activity toward stablecoin balances.
  • Compass Point estimates the agreement could cut up to $80 million from Circle and Coinbase annual EBITDA and warns other DeFi protocols may demand similar terms.

Hyperliquid’s partnership with Coinbase and Circle is changing how profits from stablecoins are distributed. Instead of going mainly to stablecoin issuers like Circle, more will now go to cryptocurrency trading platforms. Experts believe this could lead to continued demand for the HYPE token, but it might also reduce Circle’s profits.

Hyperliquid, a rapidly expanding platform for trading perpetual futures, announced a new partnership last Thursday. Circle’s USDC stablecoin will now be the primary asset used for quoting prices on the platform. Coinbase will manage the majority of USDC funds within the network, and Circle will be responsible for creating, destroying, and transferring USDC across different blockchains.

Although the specific terms weren’t disclosed, the AQA framework allows Hyperliquid to capture the majority—up to 90%—of the earnings from USDC deposits made on their platform. Previously, this revenue largely went to stablecoin issuers Circle and Coinbase.

Ryan Watkins, co-founder of Syncracy Capital, stated on X that he believes the Coinbase partnership is Hyperliquid’s most significant news of the year, and his opinion strengthens with further consideration.

Watkins explained that the agreement significantly alters how Hyperliquid operates, as the platform can now earn money from both trading fees and the interest generated by its stablecoins.

Yield sharing allows Hyperliquid’s earnings to grow more closely with the amount of funds deposited, instead of relying solely on how much trading happens, explained Watkins. He noted that because deposits are typically more stable than trading, especially during market drops, this system could help Hyperliquid consistently buy back its tokens, even when market conditions change.

As a researcher following Hyperliquid, I’m seeing significant potential revenue. With over $5 billion currently held on the platform, we estimate the protocol could generate between $135 million and $160 million in revenue. This would come from a combination of protocol fees and buybacks funded by the USDC yield sharing program.

He predicted that if the exchange holds more stablecoins, it could potentially earn an extra $300 to $500 million each year just from sharing the returns on those assets.

Recent positive developments have made HYPE one of the strongest performing cryptocurrencies, increasing almost 10% in the last week, even as the overall crypto market has struggled.

Pressure on Circle, Coinbase

Analysts at Compass Point, Ed Engel and Mike Donovan, believe this new deal will likely reduce the combined annual earnings (EBITDA) of Circle and Coinbase by approximately $60 to $80 million. This is because they are now sharing a larger portion of their reserve income with Hyperliquid compared to previous arrangements.

Analysts estimate that Hyperliquid’s $5.1 billion in USDC currently earns about $180 million in profit each year for both Coinbase and Circle.

The broader concern is that other DeFi protocols may now demand similar terms.

Engel and Donovan also noted the possibility that other decentralized finance (DeFi) platforms might start requiring a share of profits, similar to platforms like Polymarket and Jupiter.

Stablecoin consolidation

This agreement puts into writing a plan Hyperliquid started last year. The plan, called “Aligned Quote Asset,” encourages stablecoin companies to share some of their earnings with the platform if they want to be prioritized.

Looking at the current landscape, it seems Hyperliquid really forced the established players to change their approach. Instead of trying to create their own big, separate stablecoin systems like Native Markets did with USDH, they’re now more willing to directly share the financial benefits. As an investor, I see this as a positive shift – it means more focus on innovation and less on building walled gardens.

According to Paul Howard, a senior director at Wincent trading firm, this situation might lead to fewer, larger stablecoins dominating the market, as those with existing distribution and market share become more prominent.

From my observations, the stablecoin market is still growing, but I believe we’re starting to see a period where fewer players will dominate. It seems like we’re moving towards consolidation, where the strongest stablecoins will likely absorb or outcompete the others.

Reducing the number of stablecoins and simplifying how money is converted between them would make financial flows smoother, improve how easily assets can be bought and sold, and help the largest stablecoins become even more powerful and widely used.

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2026-05-18 23:23