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

BlockBeats News, May 19th, the USDC agreement reached between Hyperliquid and Coinbase and Circle is shifting stablecoin profits from the issuer to the crypto exchange. Analysts say this move may provide sustained buying pressure for the HYPE token while squeezing Circle and Coinbase's profit margins. The agreement was announced last Thursday, making Circle's USDC stablecoin the official "anchor asset" on Hyperliquid. Coinbase will become the primary reserve deployer of USDC on the network, while Circle will handle minting, redemption, and cross-chain infrastructure. Although the specific details of the revenue sharing were not disclosed, it implies that Hyperliquid will receive most of the reserve revenue generated from USDC deposits on the platform—up to 90%—a portion of this revenue that previously flowed mainly to stablecoin issuers Circle and Coinbase.

Syncracy Capital co-founder Ryan Watkins said, "The more I think about this Coinbase partnership, the more I think it's the biggest announcement from Hyperliquid this year." Watkins believes that the agreement fundamentally changes Hyperliquid's business model because the protocol now captures both transaction fees and stablecoin revenue. He stated, "Revenue sharing allows Hyperliquid's income to more directly scale with deposit size, not just trading volume." He added that since deposits are often more stable in a downturn than trading activity, this structure could make Hyperliquid's token buybacks more resilient during market cycles. Currently, there are over $5 billion in USDC deposits on Hyperliquid, and this transaction could bring in approximately $135 million to $160 million in USDC revenue sharing income for the protocol and token buyback. If the trading platform's stablecoin balance expands, he estimates that the platform could eventually generate an additional $300 million to $500 million in annualized revenue solely through revenue sharing. This prospect has made HYPE one of the best-performing cryptocurrencies recently, rising nearly 10% in the past week, contrasting sharply with the overall crypto market weakness.

Compass Point analysts Ed Engel and Mike Donovan estimate that the agreement could reduce Coinbase's and Circle's combined annual EBITDA by around $60 million to $80 million because the reserve revenue currently shared with Hyperliquid by these two companies is far higher than under the previous agreement. The two analysts estimate that, at the current rate, Hyperliquid's approximately $5.1 billion USDC supply could bring in about $180 million in annual gross profit for Coinbase and Circle combined. They also warn that protocols like Polymarket and Jupiter may demand similar terms.