How does Hyperliquid break the Circle's money bag

Original author: Cake, Deep tide TechFlow

On 14 May, Coinbase and Circle jointly announced that they would re-enter Hyperliquid, Coinbase, within the framework of "AQAv2 " , into the treasury deployment of USDC, returning most of the proceeds from USDC reserves to the Hyperliquid agreement. The USDH of Native Markets agreed to buy brand assets by Coinbase and phase out。

Sounds like a general cooperation announcement? Nope。

The exact figure is as follows: USDC stock on Hyperliquid is about $5 billion, with a current national debt return of about $200 million a year. Based on the details of the outflow, about 90 per cent of the reserve returns after the deduction of "costs" will flow back to Hyperliquid ecology, which is expected to trigger a 22 to 26 per cent increase in protocol revenues。

This is the biggest concession ever made by a single channel to stabilize the currency sector. Prior to this, only Coinbase (a co-issuer, who ate more than half of the revenue from the Circe distribution), Binance, and a few undisclosed partners were able to gain credit from Circe。

And Hyperliquid is a decentrized agreement that has no equity relationship, no joint distribution history, and even vague legal entities。

Why should it

I'm not going anywhere

To understand the deal, we have to go back to September 2025。

At that time, Hyperliquid was still using the bridge to use USDC as the main bond asset, and USDC stock was already touching $6 billion, or 7.5 per cent of all USDC traffic. At the interest rate level at the time, the $6 billion contributed approximately $220 million per year to Circle ' s reserve income, while Hyperliquid could not get a penny。

There's KOL comment: "Hyperliquid holds 5.5 billion USDC and generates $222 million annually for Circle. The USDH was launched to keep 110 million of them in the protocol. No new products, no new users, just re-allocation of reserves from the Circle shareholders to the HYPE holders."

So the Hyperliquid team did an extremely smart thing: they didn't give themselves a stable coin, but they didTake the USDH to the publicI don't know. Paxos, Ethena, Frax, Sky, Agora, Native Markets, stabilizing the money circle, half of the river. The bid terms are all around "how much you can return to Hyperliquid Ecology" and almost all the bidders report a 95%-100% split。

Finally, the community gave ticker to Native Markets, a team created by former Uniswap Labs COO Mary-Catherine Lader and others, specially tailored for Hyperliquid, with 50 per cent allocated for HYPE buyback and 50 per cent for ecological incentives。

The real power of this move is not because USDH can take over from USDC, but because, in fact, the USDH was launched eight months ago, and was never as big as USDC, but because it laid a knife on Circle and Coinbase:

Either you accept the rules of the "agreement sovereignty" game and give away the proceeds; or we change you slowly。

Coinbase's reaction is interesting. Instead of taking over the USDH branded asset with the Circe, it took over the entire AQA framework and copied it into the USDC system. On the surface, Coinbase managed to keep the USDC home, essentially Coinbase admitted:The rules of the game have changed and must be compromised。

When we took USDH eight months ago, our argument was simple: the concern was for stable currencies that could pass value to networks and users. Today, this argument is confirmed."

She was too kind to say that it was a carefully designed transfer of power in the industrial chain at the textbook level。

What's the change

FIRST FLOOR: USDC'S "CHANNEL-DIVIDE ERA" OF RESERVE REVENUE IS OFFICIALLY OPENED

In the last decade, the business model of the issuer of the stable currency has been simple and harsh: the user casts the stable currency and the issuer buys the United States dollar as a United States debt and the profit is entirely attributable to the issuer. With this approach, Circle made $2.6 billion in reserve income in 2025, raising $30 billion in IPO valuations。

THE MODEL IS BASED ON THE ASSUMPTION THAT THE ISSUER IS SCARCE AND THAT THE CHANNELS ARE ADEQUATE. USDT, USDC, AS THE TWO MOST LIQUID STABILIZERS, CEX AND DEX HAVE TO GET THEM ONLINE。

Hyperliquid proves that when a channel is large enough (7.5% of USDC flows), plusIt has the power to replace you with a stable coinThe power relationship is the reverseThe issuer becomes the B in the competition for scarce resourcesI don't know。

What happens after that? A look at the Q1 financial paper just submitted by Circe read: 2025 reserve income of US$ 2,637 million is the absolute pillar of revenue. If the future of Binance, OKX, Bybit, the Phantom on Solana, and even the ETA L2 giants negotiate with this "AQA Script", Circle's profit statement will be thin。

The CRCL share price has first reflected this anxiety. On 14 May, the disk ran to 132.44, the collection fell to 122.34, and the distance was up 7.6 per cent. The market voted with real money and silver: short-term benefits (USDC expanding in Hyperliquid) and long-term space (silent models institutionalized)。

SECOND FLOOR: HIPE GETS THE REAL CASH FLOW ANCHOR

MANY DO NOT REALIZE THAT THE LOGIC OF THE TRANSACTION ' S VALUATION OF HYPE IS A STRUCTURAL UPGRADE。

BEFORE THE HYPE VALUE STORY WAS: TRANSACTION COSTS → AID FUNDS → BUY BACK TO DESTROY. THE MODEL RELIES ON TRADE VOLUMES, WHICH ARE CYCLICAL AND HIGHLY VOLATILE。

Now there's a leg:NATIONAL DEBT RETURNS, AGREED REVENUES, BUYBACK OF HYPEI don't know. This leg doesn't depend on market sentiment, on trade dynamics, on one thingHow many dollars are locked on HyperliquidI don't know。

It's a very different cash flow. It is more similar in nature to the net interest-rate income of banks than to the transactional revenue of exchanges. The latter fluctuated significantly with the bear, as long as interest rates were not zero and stocks were not zero, thus stabilizing inflows。

A SIMPLE CALCULATION BY CURRENT SCALE: $5 BILLION X ABOUT 4 PER CENT OF NATIONAL DEBT EARNINGS X 90 PER CENT DIVIDED INTO $180 MILLION/YEAR OF ADDITIONAL AGREEMENT INCOME. ALL OF THIS MONEY GOES TO THE HYPE REPURCHASE AND ASSISTANCE FUND, WHICH FOR A CURRENCY WITH A MARKET VALUE OF ABOUT $15 BILLION, MEANS AN ADDITIONAL "PASSIVE DEFLATION" OF MORE THAN 1 PER CENT PER YEAR, AND THE POOL IS GROWING AT DOUBLE THE SAME RATE。

THE NEWS THE DAY HYPE WENT UP 14%, THE MARKET REACTED RIGHT. BUT WHAT IS EVEN MORE NOTEWORTHY IS NOT THE INCREASE IN THIS DAY, BUT THE MOVEMENT OF THE HYPE VALUATION MODEL FROM "THE EXCHANGE TOKEN TO THE SOVEREIGN STABILIZER'S RECEIPTS."。

The latter is a completely different asset class where the market has no pricing framework。

LEVEL THREE: USDC'S "NEUTRAL" HAS GONE BANKRUPT

This is the most easily neglected, but possibly the most far-reaching, layer。

THE STABILITY CURRENCY IS A CLEARING HOUSE FOR THE ENCRYPTED WORLD BY BEING NEUTRAL, AND USDC THEORETICALLY TREATS ALL CHAINS, ALL EXCHANGES AND ALL APPLICATIONS EQUALLY. THIS IS SOMETHING DIFFERENT FROM BANKS: BANKS HAVE A CUSTOMER HIERARCHY AND NO STABLE CURRENCY。

However, the AQAv2 agreement gives Hyperliquid a different treatment than USDC’s treatment on the Ethernet, in Solana, in Arbitrum. Hyperliquid received 90 per cent of the reserve share of proceeds, Circle and Coinbase also pledged HYPE as a certifier, which is highly customized and deeply bound。

So the question is:WHEN USDC GIVES DIFFERENT ECONOMIC TERMS TO DIFFERENT NETWORKS, CAN IT BE A NEUTRAL LIQUIDATION

Every bargaining channel begins to demand its special provisions. Solana, no? The USDC will eventually become a highly fragmented "distortive network" of dozens of bilateral agreements。

THIS IS THE REAL LEGACY OF USDH, WHICH DID NOT LOSE TO USDC, WHICH MADE USSDH。

"USDH may be disappearing, but its core inn already won because Coinbase is approaching the underlying economics."。

Deep tide view

FROM A TRADER'S POINT OF VIEW, THE MOST INTERESTING THING ABOUT THIS IS THE 14% INCREASE IN HYPE AND THE 7% DROP IN CRCL. THE MOST INTERESTING THING IS:Every "reverse pricing" story in financial history ends in the same way。

Visa and Mastercard continued to eat the largest profits of the card organization because they were channels; commercial banks were eventually willing to share a joint credit card with Wal-Mart and Costco, because there was no trading without terminals; 30 per cent of Apple Store in that year, which was essentially a source of tax on developers。

But the other side of the story is:When the channel is big enough to reach a certain threshold, it will reverse the profits upstreamCostco's own brand, Kirkland, has been in the forefront of consumer intelligence, Spotify has been pushing record companies to accept subscriptions, Steam has forced distributors to accept a 30% share while giving them refund rights。

The price of the world's stability is still in the "upstream" stage。Hyperliquid did this to push the industry to the next stage of "the channel."。

In the short term, it's just a deal. In the medium term, this is the beginning of a structured cutting of the Circle business model. In the long run, this is the turning point for stabilizing the currency from "issuer sovereignty" to "network sovereignty", which no longer belongs only to the company that issues it, and it began to belong to the network that settles it。

Those who think it's just Hyperliquid winning a game didn't see the real table turned over。

Who's next? I bet Solana, it won't take long。