Hyperliquid's USDC deal could channel stablecoin yield to HYPE, pressuring Circle and Coinbase margins

Huo Xing Cai Jing reported that Hyperliquid's new arrangement with Coinbase and Circle, dated May 19, shifts a larger share of stablecoin economics away from issuers and toward the exchange and protocol. Market observers say the structure could create steadier buy-side support for Hyperliquid's HYPE token while trimming profitability for Circle and Coinbase. Under an agreement announced last Thursday, Circle's USDC becomes Hyperliquid's official "aligned quote asset". Coinbase will act as the primary treasury deployer for most USDC on the network, while Circle remains responsible for minting and redemptions, as well as cross-chain infrastructure. Revenue-sharing terms were not disclosed. Analysts nonetheless estimate Hyperliquid will retain the bulk of the reserve yield generated by USDC deposits on the platform—as much as 90%—income that previously accrued mainly to USDC issuers Circle and Coinbase. Ryan Watkins, co-founder of Syncracy Capital, called the partnership Hyperliquid's most significant announcement of the year, arguing it reshapes the protocol's model by capturing both trading fees and stablecoin yield. In his view, tying revenues more closely to deposit volumes could make token buybacks more durable during market downturns, since deposits tend to be less volatile than trading activity. USDC deposits on Hyperliquid currently exceed $5 billion. Watkins estimates the deal could generate about $135 million to $160 million a year in USDC revenue-sharing for the protocol and token buybacks, with potential to add $300 million to $500 million in annualized revenue from yield sharing alone if stablecoin balances expand further. HYPE has reacted positively, rising nearly 10% over the past week even as the broader crypto market weakened. Compass Point analysts Ed Engel and Mike Donovan estimate the agreement could cut Circle's and Coinbase's combined annual EBITDA by roughly $60 million to $80 million, as both now give up a materially larger share of reserve yield than under prior arrangements. At current interest rates, they estimate Hyperliquid's roughly $5.1 billion USDC supply could previously have produced about $180 million in annual gross profit for Coinbase and Circle combined. The analysts added that other platforms, including Polymarket and Jupiter, may push for similar economics.