Analyst: Hyperliquid Could Bring Massive Long-Term Buying Power to HYPE via USDC Protocol, Squeezing Circle and Coinbase Profit Margins

On May 19, a USDC agreement between Hyperliquid, Coinbase, and Circle is shifting stablecoin profits away from issuers and toward the crypto exchange. Analysts note the move could put sustained upward pressure on HYPE tokens while crimping profit margins at Circle and Coinbase. Announced last Thursday, the deal names Circle’s USDC stablecoin as Hyperliquid’s official “anchor asset.” Coinbase will serve as the network’s primary USDC reserve deployer, while Circle will handle minting, redemptions, and cross-chain infrastructure. While exact revenue-sharing details were not disclosed, the arrangement means Hyperliquid will take the vast majority (up to 90%) of reserve revenue from USDC deposits on its platform—funds that previously flowed mostly to issuers Circle and Coinbase. Syncracy Capital co-founder Ryan Watkins said, “The more I’ve thought about this Coinbase partnership, the more I think it’s Hyperliquid’s biggest announcement of the year.” Watkins believes the deal fundamentally changes Hyperliquid’s business model, as the protocol now captures both transaction fees and stablecoin revenue. “This revenue-sharing setup lets Hyperliquid’s income scale more directly with deposit size, not just trading volume,” he stated. He added that since deposits tend to stay steadier during market downturns than trading activity, this structure could make Hyperliquid’s token buybacks more resilient across market cycles. Currently, Hyperliquid holds over $5 billion in USDC deposits; this transaction could bring in roughly $135 million to $160 million in revenue-sharing funds for the protocol to use for token buybacks. If the trading platform’s stablecoin holdings expand, he estimates it could eventually generate an additional $300 million to $500 million in annual revenue solely from revenue sharing. This outlook has made HYPE one of the best-performing cryptocurrencies recently, surging nearly 10% in the past week— a sharp contrast to the broader crypto market’s current weakness. Compass Point analysts Ed Engel and Mike Donovan estimate the deal could reduce Coinbase and Circle’s combined annual EBITDA by $60 million to $80 million, as the reserve revenue the two now send to Hyperliquid is far higher than under their previous agreement. At current levels, they calculate Hyperliquid’s roughly $5.1 billion USDC deposits bring in about $180 million in annual gross profit for Coinbase and Circle together. The analysts also warn that protocols like Polymarket and Jupiter may push for similar terms.