USDH to be phased out as Coinbase becomes the official USDC deployer on Hyperliquid

Original | Odaily Planet Daily (@OdailyChina)

Author | Wenser (@wenser 2010)

In September last year, the dispute over Hyperliquid’s native stablecoin, USDH, became a focal point in the industry; now, this once highly anticipated stablecoin has suddenly entered its “exit phase.”

Last night, Coinbase announced it will become the official treasury deployer for USDC on Hyperliquid, while Native Markets, the issuer of Hyperliquid’s native stablecoin USDH, has granted Coinbase the rights to purchase USDH-branded assets. Subsequently, the USDH market will be gradually phased out, during which users can still exchange USDH for USDC or fiat currency without fees.

Since then, the once-prominent USDH has become an asset acquired by Coinbase, and USDC has been officially established as Hyperliquid’s official stablecoin and quoting asset. Odaily Planet Daily will analyze the details and subsequent impacts of this development in this article.

USDH Departs, USDC Rises: The Economics Behind $5 Billion

The drama of the "Hyperliquid ecosystem stablecoin battle" ended with a win for Coinbase & Circle, Hyperliquid, and USDH issuer Native Markets.

Coinbase further deepens its integration with the Hyperliquid ecosystem; Hyperliquid captures the majority of the USDC stablecoin reserve yields within its ecosystem; Native Markets, the former ultimate winner of USDH, realizes its return by selling its USDH brand assets.

Coinbase & Circle: Integrating with Hyperliquid's on-chain economy, further increasing investment in HYPE

Currently, the USDC volume on Hyperliquid is approximately $5.164 billion, representing a threefold increase year-over-year.

As an official partner and revenue-sharing entity of USDC, Coinbase’s move is clearly aimed at deeply integrating with the Hyperliquid ecosystem.

Additionally, according to Hyperliquid’s official announcement, Coinbase (the capital deployer) and Circle (responsible for the technical implementation of CCTP and native cross-chain infrastructure) have both committed to staking HYPE to activate AQAv2 (Aligned Quote Asset v2).

Notably, in September last year, Circle purchased HYPE tokens, and its HYPE token staking volume has now grown to approximately 500,000 tokens.

Hyperliquid: Reaps the majority of USDC reserve yields and enjoys the benefits of being a Coinbase partner.

The undisputed biggest winner of this partnership is undoubtedly Hyperliquid, the foundational ecosystem layer.

According to the official announcement, Coinbase will subsequently share the vast majority of reserve income with the Hyperliquid protocol. Although the specific revenue-sharing ratio has not yet been disclosed, if the previous USDH revenue-sharing mechanism is applied, Hyperliquid would effectively receive approximately 90% of the reserve income.

According to calculations by Hyperliquid community members, with a scale of $4.7 billion and an interest rate yield of 3.8%, this income corresponds to approximately $160 million; in other words, this equates to daily HYPE token buybacks of $440,000.

Moreover, with the CLARITY Bill passing a vote in the U.S. Senate Banking Committee, Hyperliquid’s close ties to Coinbase also imply that HYPE and Hyperliquid have gained a degree of support within the U.S. regulatory framework.

Native Markets: USDH has fulfilled its historical mission

As the issuer of USDH, Hyperliquid’s native stablecoin, Native Markets appears to be the biggest loser in this “integration event,” but according to their official statement, their outcome can be described as a successful withdrawal.

On one hand, USDH serves as an example and template for Coinbase and the Hyperliquid protocol to share USDC revenue; on the other hand, Coinbase appears to have directly acquired the brand assets related to USDH, meaning the USDH stablecoin issued by the Native Markets team has effectively been "acquired by Coinbase," thereby providing the team with certain economic returns.

Subsequently, Native Markets also stated that it would remain independent and seek development in other areas.

After USDH's exit, under the three-way win scenario, only USDH users will suffer.

Of course, Native Markets' exit was not universally praised; Hyperliquid community users also expressed skepticism about its claim of having "sat down at the negotiating table."

Some believe that USDH's exit signifies a complete setback for the era of decentralization;

Some have also pointed out that the USDH stablecoin issuer’s vote should have gone to Paxos, as they at least had users and stablecoin growth in mind, while those who voted for Native Markets were merely aligning themselves for internal interests. In the end, end users gained nothing. These remarks have received considerable agreement and support.

Thus, the drama of "the billionaire chasing love" and "rebelling against the giant" that took place a year ago has finally come to an end.

Yet, looking now at the reconciliation between Hyperliquid, Coinbase, and Circle, it’s undeniably bittersweet and somewhat ironic.

In the end, it was all about the distribution of profits, not the slogans once shouted—“for the community,” “for Hyperliquid.”