Hyperliquid's USDC protocol may redirect stablecoin profits to HYPE, affecting Circle and Coinbase.

Huo Xing Cai Jing reports that, on May 19, Hyperliquid’s agreement with Coinbase and Circle is shifting stablecoin profits from issuers to cryptocurrency exchanges. Analysts say this move could provide sustained buying pressure for the HYPE token while squeezing Circle’s and Coinbase’s profit margins. Announced last Thursday, the agreement designates Circle’s USDC stablecoin as an official “aligned quote asset” on Hyperliquid. Coinbase will serve as the primary treasury deployer for most USDC on the network, while Circle handles minting, redemption, and cross-chain infrastructure. Although specific revenue-sharing details were not disclosed, the arrangement means Hyperliquid will capture the majority—up to 90%—of reserve yields generated by USDC deposits on its platform, previously flowing primarily to the stablecoin issuers Circle and Coinbase. Ryan Watkins, co-founder of Syncracy Capital, said: “The more I think about this Coinbase partnership, the more I believe it’s Hyperliquid’s biggest announcement this year.” Watkins argues that the agreement fundamentally transforms Hyperliquid’s business model by capturing both trading fees and stablecoin yields. He added: “Revenue sharing allows Hyperliquid’s income to scale more directly with deposit volume rather than just trading volume.” He noted that since deposits tend to be more stable than trading activity during downturns, this structure could make Hyperliquid’s token buybacks more resilient across market cycles. Currently, USDC deposits on Hyperliquid exceed $5 billion, and this deal could generate approximately $135 million to $160 million in annual USDC revenue-sharing income for the protocol and token buybacks. If the platform’s stablecoin balances grow further, he estimates Hyperliquid could eventually generate an additional $300 million to $500 million in annualized revenue solely from yield sharing. This prospect has made HYPE one of the best-performing cryptocurrencies recently, rising nearly 10% over the past week—a stark contrast to the broader crypto market’s weakness. Compass Point analysts Ed Engel and Mike Donovan estimate that the agreement could reduce Circle’s and Coinbase’s combined annual EBITDA by approximately $60 million to $80 million, as both companies now share a significantly higher portion of reserve yields than under prior agreements. The analysts estimate that, at current interest rates, Hyperliquid’s $5.1 billion USDC supply could have previously generated about $180 million in annual gross profit for Coinbase and Circle combined. They also warned that protocols such as Polymarket and Jupiter may demand similar terms.