A new partnership scheme between Circle, Coinbase, and Hyperliquid is changing the economics of the USDC stablecoin and creating unforeseen risks for both companies. I draw this conclusion based on a detailed analysis of recent changes in the terms of cooperation, which were updated in May by three key market players.
Essence of the Changes
Coinbase now considers USDC held on the decentralized perpetual futures exchange Hyperliquid as an asset located "on the platform." This allows the exchange to earn income from the reserves of these funds, after which 90% of this amount is transferred to Hyperliquid. Previously, according to my data, Coinbase shared this income almost equally with Circle, which was standard practice for maintaining a balance of interests.
Hyperliquid, in turn, holds about $6 billion in USDC, which accounts for approximately 8% of the total token supply in circulation. This makes the exchange one of the largest holders of the stablecoin. Hyperliquid's trading volume exceeded $150 billion in July, and its share relative to Binance reached 11.5%. The platform leads among decentralized perpetual futures exchanges.
Analytical Assessment
JPMorgan characterized the new scheme as a "prisoner's dilemma" for Circle and Coinbase. In their view, such a partnership forces the companies to compete for USDC distribution, undermining their mutual interests. As a result, the bank lowered profit forecasts for both entities. This is logical: the concentration of liquidity on a single platform creates systemic risks, especially amid the weakening of the overall crypto market.
Since March, the volume of USDC in circulation has decreased from $80 billion to $73 billion, and the capitalization of the entire stablecoin sector has dropped by $10 billion since May. The pressure on the market is evident. However, in the long term, higher interest rates may partially offset losses from USDC reserves, softening the blow for the issuer.
Japanese Vector
In parallel, Circle is stepping up its expansion in Japan. On July 14, the company signed a memorandum of understanding with the country's largest payment system, JCB. The parties plan to use USDC for cross-border payments, domestic settlements, and payments for goods from local merchants, including tourists. The pilot project will begin with internal transfers within JCB, which serves about 140 million cardholders and over 40 million merchant locations worldwide.
Additionally, Circle, together with Japan's Nomura, is preparing to launch a currency settlement service based on USDC for local companies, scheduled for 2027. These steps show that the company is seeking new markets to offset pressure on its core business.
My expert opinion: The deal with Hyperliquid is a double-edged sword. On one hand, it gives Circle and Coinbase access to enormous liquidity, but on the other, it creates dependence on a single platform, which, amid crypto market volatility, could lead to serious problems. The stablecoin market is entering a consolidation phase, and those who do not diversify risks may be left behind.