TL;DR:
- JPMorgan lowered forecasts for Circle and Coinbase, saying their revamped Hyperliquid arrangement creates a near-term revenue headwind and a long-term USDC economics threat.
- Hyperliquid holds about $6 billion of USDC, roughly 8% of circulating supply, and processed more than $150 billion in July volume.
- Coinbase will classify Hyperliquid USDC as on-platform, collect reserve income and pay 90% to Hyperliquid, redistributing stablecoin economics away from Circle and Coinbase directly over time.
JPMorgan has put a sharper label on the changing economics between Circle, Coinbase and Hyperliquid: a “prisoner’s dilemma.” The bank lowered forecasts for Circle Internet and Coinbase after their revamped Hyperliquid arrangement, arguing it creates a near-term revenue headwind for both firms and a bigger long-term threat to Circle’s USDC model. Hyperliquid now holds about $6 billion of USDC, or roughly 8% of circulating supply. The problem is distribution turning against partnership logic, as two allies are pushed to compete around the same stablecoin.
Under the new arrangement, Coinbase will classify USDC held on Hyperliquid as “on-platform,” collecting income generated by reserves and paying 90% of that income to Hyperliquid. JPMorgan estimated Coinbase previously split nearly all of that revenue evenly with Circle. That change matters because USDC economics depend not only on circulation, but on who captures the interest income attached to reserves. The revenue pool is being redistributed, and the redistribution favors Hyperliquid’s growth while pressuring the economics of the issuer and exchange behind USDC.
Hyperliquid’s rise tests the USDC partnership model
The venue’s scale explains why the issue is now material. Hyperliquid is described as one of crypto’s fastest-growing trading venues and the leading decentralized perpetual futures exchange. The platform processed more than $150 billion in trading volume in July alone, while its volume relative to Binance rose to 11.5%, showing its growing share of derivatives activity. USDC balances on the platform have swelled to around $6 billion, making it an important distribution channel. Hyperliquid is no longer a side venue, so concessions made to keep USDC embedded there now carry real earnings consequences.
The warning also lands as USDC loses momentum. Its circulating supply has dropped to about $73 billion from nearly $80 billion in March, while the broader stablecoin market has contracted by $10 billion since May as crypto trading cooled and regulated rivals challenged incumbents. JPMorgan said weaker crypto markets also contributed to its lower estimates, though higher interest rates may support USDC-related revenue longer term. Circle and Coinbase now face an uncomfortable tradeoff, protect margin and risk distribution, or defend distribution by sharing more economics with powerful platforms. That is why the “prisoner’s dilemma” framing resonates: growth can still weaken the partners funding it as stablecoin competition intensifies across venues and users.
