New partnership terms between Circle, Coinbase, and the decentralized exchange Hyperliquid create serious risks for the USDC stablecoin economy. This involves a revision of the revenue distribution model, which now favors Hyperliquid and pits the interests of key players against each other.
In May, Coinbase reclassified USDC held on Hyperliquid, recognizing it as an asset held "on the platform." This allowed the exchange to earn income from the reserves of these funds, but 90% of this amount immediately goes to Hyperliquid. Previously, Coinbase shared this income roughly equally with Circle, which was beneficial for both parties. Now, the scheme shifts in favor of Hyperliquid, which holds $6 billion in USDC — about 8% of the total circulating supply of the token.
Hyperliquid is currently one of the largest trading platforms in the world, leading among decentralized perpetual futures exchanges. In July, the platform's trading volume exceeded $150 billion, and its share relative to Binance reached 11.5%. Such dominance gives Hyperliquid leverage over stablecoin issuers.
JPMorgan called the new scheme a "prisoner's dilemma": Circle and Coinbase are forced to compete for USDC distribution instead of jointly reaping benefits. Against this backdrop, analysts have lowered profit forecasts for both companies. An additional pressure factor is the weakening crypto market: since March, the volume of USDC in circulation has dropped from $80 billion to $73 billion, and the capitalization of the entire stablecoin sector has decreased by $10 billion since May.
However, in the long term, high interest rates may partially offset losses from declining USDC reserves. Nevertheless, one thing is clear: the current partnership model jeopardizes the stability of Circle and Coinbase's revenues, making them dependent on a single major player.
My expert assessment: The situation with Hyperliquid is a vivid example of how decentralized platforms, gaining momentum, begin to dictate terms even to giants like Circle and Coinbase. If this trend continues, we may see a redistribution of market power in the stablecoin sector, which will inevitably impact the entire ecosystem.