Hyperliquid’s new arrangement with Circle and Coinbase is changing who keeps the economics of stablecoin reserves. Analysts say the structure redirects a meaningful share of USDC-related income away from the issuer and distribution partners and toward the trading venue itself, a shift that could support more durable HYPE buybacks while putting pressure on Circle and Coinbase margins.
The deal was announced last Thursday. Under the agreement, Circle’s USDC becomes the official “Aligned Quote Asset,” or AQA, on Hyperliquid. Coinbase will serve as the treasury deployer for most USDC on the network, while Circle will manage minting, redemptions, and cross-chain infrastructure.
Reserve income may now flow mainly to Hyperliquid
The exact revenue split was not disclosed, but analysts said the AQA framework means Hyperliquid is set to receive most of the reserve income generated by USDC deposits on the platform, potentially as much as 90%. That revenue historically flowed mostly to Circle and Coinbase. Syncracy Capital co-founder Ryan Watkins wrote on X that the Coinbase partnership may be Hyperliquid’s biggest announcement of the year.
Watkins argued that the agreement changes Hyperliquid’s business model because the protocol now captures both trading fees and stablecoin yield. In his view, revenue sharing tied to yield lets the platform scale more directly with deposits instead of relying only on trading activity. Deposits also tend to hold up better than volume during weaker markets, which he said could make token buybacks more resilient across market cycles.
Analysts see a sizable boost to protocol revenue
Watkins said Hyperliquid currently has more than $5 billion on the platform. Based on that level, USDC yield sharing could contribute roughly $135 million to $160 million in revenue for the protocol and buybacks. If stablecoin balances on the exchange keep growing, he estimated the platform could eventually add $300 million to $500 million in annualized revenue from yield sharing alone.
That outlook has helped HYPE stand out in recent trading. Over the past week, the token gained nearly 10%, outperforming even as the broader crypto market stayed weak.
Circle and Coinbase face a profit squeeze
Compass Point analysts Ed Engel and Mike Donovan estimate the new structure could remove around $60 million to $80 million in annual EBITDA from Circle and Coinbase combined. Their view is that both companies are now giving up a much larger share of reserve income to Hyperliquid than they did under earlier arrangements.
At current interest rates, the analysts estimate Hyperliquid’s roughly $5.1 billion USDC supply generates about $180 million in annual gross profit for Coinbase and Circle together. Their larger concern is that other DeFi protocols may push for similar terms, which would put the industry’s stablecoin revenue split under closer pressure.