A new deal on stablecoin yield sharing could redirect over $160 million annually from Circle and Coinbase to the Hyperliquid protocol, reshaping the economics of crypto's financial plumbing.
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Hyperliquid to capture 90% of USDC yield in landmark deal
Hyperliquid has secured a landmark agreement with Circle and Coinbase to capture up to 90 percent of the reserve income from USDC held on its platform, a move that fundamentally alters stablecoin revenue models and directly fuels buybacks of its HYPE token.
"The more I think about this Coinbase partnership, the more I believe it is Hyperliquid’s biggest announcement all year," Syncracy Capital co-founder Ryan Watkins wrote on X, noting the deal shifts Hyperliquid's model to scale with deposits, not just trading volume.
The agreement could channel between $135 million and $160 million in annual revenue to Hyperliquid at current interest rates, based on the roughly $5.1 billion in USDC on the exchange, according to analyst estimates. Compass Point analysts calculate a corresponding reduction of $60 million to $80 million in annual EBITDA for Circle and Coinbase combined.
This yield-sharing arrangement sets a new precedent, pressuring stablecoin issuers by forcing them to share reserve income with the platforms that provide distribution. The deal's success, which has already helped push the HYPE token up nearly 10% in the last week to a peak of $46.93, now hinges on sustained USDC balances on Hyperliquid and stable interest rates.
How the Yield-Share Works
The deal, dubbed "Aligned Quote Asset v2" (AQAv2), formalizes a strategy Hyperliquid began last year. Under the new structure, income generated from the US Treasury reserves backing Circle's USDC is no longer kept almost exclusively by the issuer and its distribution partners. Instead, up to 90% of that yield flows to Hyperliquid's Assistance Fund, which will use the capital to execute buybacks of the HYPE token.
Coinbase will act as the treasury deployer for the USDC reserves, while Circle will continue to manage minting, redemptions, and cross-chain infrastructure. To align interests further, both Coinbase and Circle have also become validators on the Hyperliquid network, each staking $20 million. The protocol has established a $30 million repurchase authorization to formalize the buyback program.
A New DeFi Standard?
The broader concern for incumbents is that other large DeFi protocols may now demand similar terms, threatening a key revenue stream for stablecoin issuers. "We also see risk that other DeFi protocols demand yield sharing arrangements," Compass Point analysts Ed Engel and Mike Donovan wrote, pointing to platforms such as Polymarket and Jupiter.
For HYPE investors, the deal creates a direct link between the platform's deposits and the token's value via a structured, recurring buyback mechanism. This new revenue stream from USDC yield is in addition to existing buybacks funded by trading fees from the perpetual futures exchange.
However, the mechanism introduces new risks. The revenue stream is directly tied to prevailing interest rates; a significant cut by the Federal Reserve would proportionally reduce the buyback funds. It also creates a dependency on the protocol's relationship with Circle and Coinbase, making USDC balances on the exchange a key metric for investors to monitor.
This article is for informational purposes only and does not constitute investment advice.
[1] Hyperliquid-Coinbase-Circle Deal Boosts HYPE While Pressuring Stablecoin Margins[2] Hyperliquid's USDC deal could supercharge HYPE, pressure Circle, Coinbase margins, analysts say[3] HYPE Token Surges Past Cardano, Zcash as Hyperliquid Partners with Coinbase and Circle[4] BeInCrypto Institutional Research: 15 Blockchain Infrastructure Firms Powering Wall Street Adoption[5] Hyperliquid negotiates deal to capture 90% of Circle's USDC reserve yield for HYPE buybacks - Crypto Briefing
