Expert analysis: The Hyperliquid deal threatens the USDC economy and forces JPMorgan to revise forecasts for Circle and Coinbase.

New Partnership: Redistribution of Stablecoin Revenue

Recently updated terms of cooperation between Circle, Coinbase, and the decentralized exchange Hyperliquid have raised serious concerns in financial circles. According to my analysis, this deal fundamentally changes the economics of the USDC stablecoin. Coinbase now treats USDC funds placed on Hyperliquid as assets held "on the platform" and earns income from the reserves of these funds, subsequently transferring 90% of this amount to Hyperliquid itself. Previously, as I found out, the reserve income was split almost equally between Coinbase and Circle.

Giant Liquidity Pool: $6 Billion in USDC

Hyperliquid holds a massive $6 billion in USDC stablecoins, accounting for about 8% of the total token supply in circulation. This makes the platform one of the largest holders of USDC. Hyperliquid's trading volume exceeded $150 billion in July, and its share relative to Binance reached 11.5%. Such dominance creates a unique situation where a single player can significantly influence the stablecoin market.

"Prisoner's Dilemma" for Issuers

JPMorgan analysts, who revised their profit forecasts for both companies, described the new scheme as a "prisoner's dilemma." The essence is that Circle and Coinbase, instead of jointly benefiting from USDC, are now forced to compete for token distribution. This creates a risk of reduced business margins for both parties. An additional negative factor is the weakening of the crypto market: since March, the USDC supply has decreased from $80 billion to $73 billion, and the total capitalization of the stablecoin sector has dropped by $10 billion since May.

Long-Term Outlook and Japanese Direction

Despite current risks, it is worth noting that in the long term, higher interest rates may partially support Circle's income from USDC reserves. The company is also actively moving into Asia: on July 14, Circle signed a memorandum with Japan's largest payment system, JCB. The partners plan to use USDC for cross-border payments and domestic settlements, which could open up new markets. However, as I have previously noted, liquidity risks for stablecoin issuers, including Tether and Circle, persist.

The deal with Hyperliquid is a vivid example of how centralized players (Circle and Coinbase) are trying to adapt to the realities of decentralized finance. However, by giving the lion's share of revenue to a single platform, they are essentially creating a new "whale" that can dictate terms. This is a troubling signal for the entire USDC ecosystem, which is already under pressure from market conditions. Investors should closely monitor how this conflict of interest develops.