The large-scale partnership between Circle and Coinbase with the decentralized exchange Hyperliquid, previously perceived as a strategic success, now threatens the economy of the USDC stablecoin. JPMorgan analysts have revised their estimates downward for both companies, pointing to fundamental risks created by the new revenue-sharing structure.
In May, the terms of the collaboration were radically changed. Coinbase now classifies USDC held on Hyperliquid as assets stored "on the platform" and earns income from the reserves of these funds. However, 90% of this amount is transferred by the exchange to Hyperliquid. Previously, according to JPMorgan, Coinbase shared reserve income almost equally with Circle, ensuring a steady stream of fees for the issuer.
New Reality: The "Prisoner's Dilemma"
According to experts, this restructuring creates a classic "prisoner's dilemma" for Circle and Coinbase. Both companies are now forced to compete for USDC distribution rather than cooperate to maximize profits. This results in Hyperliquid, which holds about 11.5% of the market relative to Binance and retains $6 billion in USDC (approximately 8% of the total supply), receiving an unjustifiably high share of revenue.
"The change in the relationship with Hyperliquid exposes a fundamental vulnerability in the Circle and Coinbase partnership model. They risk falling into a trap where competition for the largest USDC holders will eat away at their margins," experts emphasize.
Trading volume on Hyperliquid exceeded $150 billion in July, making it a dominant force in the derivatives market. This growth, however, does not bring proportional benefits to the USDC issuer but rather creates new risks for it.
Market Pressure and Prospects
An additional pressure factor is the overall weakening of the crypto market. Since March, the supply of USDC in circulation has decreased from $80 billion to $73 billion, and the market capitalization of the entire stablecoin sector has lost $10 billion since May. This exacerbates the situation, as a reduction in the reserve base directly lowers the revenues of Circle and Coinbase.
However, JPMorgan notes that in the long term, high interest rates may partially offset losses, supporting the yield from USDC reserves. But the main question remains open: can Circle and Coinbase renegotiate terms with Hyperliquid, or will the "prisoner's dilemma" become the new norm for the entire stablecoin market?
My comment: This situation is a vivid example of how DeFi giants like Hyperliquid can reshape the economics of traditional partnerships. Circle and Coinbase have found themselves trapped by their own success: to maintain USDC's dominance, they are forced to make concessions that undermine their own margins. The stablecoin market is entering a phase of intense competition, where size matters but does not guarantee profit.