Coinbase stuffed USDC into Hyperliquid; who made money from this transaction?

Author: David Christopher

Compiled by: Jiahua, ChainCatcher

Tether dominates Binance, but Coinbase has just integrated USDC into Hyperliquid. The competition for stablecoin distribution channels is intensifying.

Hyperliquid is currently the most fiercely contested battleground in the crypto space. Last week, the HYPE spot ETFs from 21Shares and Bitwise were listed on U.S. exchanges, followed closely by Grayscale and VanEck.

Beneath this institutional frenzy lies a protracted battle for interests, with all parties eager to share in the profits of this exchange.

Last fall, Hyperliquid launched a public tender for a native stablecoin called USDH, aiming to reclaim revenue lost to Coinbase and Circle.

At that time, approximately $5.6 billion of USDC was held in the exchange's cross-chain bridge, generating about $200 million in interest annually, all of which flowed to its centralized competitors, leaving the platform that truly created demand with nothing.

Ultimately, Native Markets won the community vote in the bidding against companies like Paxos and Ethena, leading to the official launch of USDH.

Bankless: The USDH Bidding War of Hyperliquid

However, just last week, Native Markets sold USDH to Coinbase, agreeing to gradually phase out this native stablecoin and allow USDC to become the primary quoted asset on the exchange again.

In exchange, 90% of the revenue will flow back to Hyperliquid, although the specific revenue capture mechanism remains unclear. The general perception is that this deal is a victory for Hyperliquid, while Coinbase and Circle are seen as the losers. This interpretation is understandable but not entirely accurate.

The benefits Hyperliquid gains from this deal are evident: significantly increased revenue sharing, approximately double that of the USDH period; regulatory support through an alliance with the most influential forces in the crypto industry in Washington; and the user experience advantages brought by returning to a trusted stablecoin.

After all, the exchange was initially built around USDC, and USDC has dominated the HIP-3 market, which has garnered countless headlines for Hyperliquid over the past six months.

Coinbase and Circle's actions are viewed as a strategy to enhance their image, aligning with one of the most crypto-native and successful projects of the last cycle.

But when considering the actual market positioning of USDC alongside the growth trajectory of perpetual contracts, a second beneficiary emerges.

Coinbase and Circle are gaining a massive distribution channel for USDC, which may be the most crucial aspect of the entire deal.

My interpretation: Coinbase and Circle have gained a defensive tool against USDT and a new growth point, essentially matching Binance's quoted assets.

Hyperliquid has gained regulatory support and substantial revenue, though the exact figures remain unclear, they are certainly higher than before.

What is the status of USDC's home turf?

Since the passage of the GENIUS Act, USDC has shown strong momentum. Circle has prepared the regulatory environment created by this framework in advance, with USDC based in the U.S. and highly compliant. This positioning has translated into actual trading volume.

Allium data shows that USDC's trading volume reached $355 billion in May 2026, surpassing USDT for the first time in recent months, indicating a significant acceleration in growth since the GENIUS Act was passed last July.

What hasn't changed is the overall structural pattern. In April 2025, just before the GENIUS Act was introduced, USDT held 67% of the stablecoin market share, while USDC accounted for 27.6%.

A year later, USDT's share was 67.3%, and USDC's was 28.1%. The change was only half a percentage point. Despite the accelerated growth in USDC's trading volume, its supply share remains stagnant.

A report from Artemis last October pointed out that the U.S. is the strongest market for USDC. Considering the growth trend after the GENIUS Act, the U.S. has consistently been the largest growth engine for USDC.

However, this is precisely where the new round of competition is concentrated. Stripe has decisively entered the market through acquisitions like Tempo. Major financial institutions are also launching local stablecoins that meet GENIUS standards. USDC's home turf is being encroached from all sides.

Once competition intensifies domestically, USDC has almost no fallback positions overseas. In other regions, USDT dominates as the default dollar, widely used for savings, investment, and trading, and is still actively expanding.

In the past year, several new public chains have launched specifically to expand USDT's distribution channels, and Tether has also introduced USAT to attack USDC within the GENIUS-compliant U.S. regulatory framework.

Coinbase and Circle have momentum for continued expansion but face a brief window to secure distribution positions before competition escalates. The trading sector, especially perpetual contracts, is the best breakthrough point.

Bankless: Tether Launches U.S. Regulated USA₮ Stablecoin

Perpetual Contracts are the Main Arena

Like stablecoins, perpetual contracts are one of the fastest-growing sectors in crypto, consistently maintaining double-digit or even triple-digit year-on-year growth.

They are structurally deeply tied to stablecoins, with stablecoins primarily serving as the quoted assets for building perpetual contract markets. USDT has already established a major foothold here, becoming the primary quoted asset in most markets on Binance, the world's largest perpetual contract exchange.

Anyone trading in Binance's largest markets is primarily using USDT, which solidifies the supply of USDT within the exchange and drives related deposit and withdrawal activities as well as on-chain activities.

Although Hyperliquid's trading volume is far less than Binance's, it is the largest on-chain perpetual contract exchange, holding 30% of the on-chain perpetual contract market share and controlling 46% of open contracts. Despite repeated challenges from competitors, this position remains solid.

While it is not a centralized platform, it competes effectively. As of April 30, its trading volume was about 50% of Bybit's, 30% of OKX's, and 79% of Coinbase's international site. Combined, this is only 13% of Binance's, but this number has been steadily increasing.

Although still in its early stages, Hyperliquid's dominance in the on-chain perpetual contract space, along with its trading volume that can rival or even sometimes exceed centralized exchanges, gives it global influence to compete with Binance in non-U.S. regions.

This opens a channel for Coinbase and Circle to compete with Tether, turning Hyperliquid into a structural distribution channel for USDC.

Coinbase Has Clarified Its Path

However, this raises a question: Why doesn't Coinbase establish this distribution channel directly by expanding its own perpetual contract products?

Because Coinbase is constrained by regulatory frameworks, limiting the number of customers it can serve and the markets it can open. Currently, Coinbase operates in about 100 countries, just over half of Binance's 180 countries.

Thanks to a more relaxed environment, Hyperliquid can reach more regions, providing advantages to both Binance and Coinbase, which is something Coinbase cannot replicate.

Therefore, Coinbase and Circle have allowed Hyperliquid to take on the task of global expansion, while USDC rides along.

This deal captures upward space through the growth of USDC's supply and the accompanying revenue, while allowing Coinbase to avoid getting embroiled in an unwinnable jurisdictional battle. The slice of the pie may not be large, but this pie itself is something they couldn't reach on their own.

Tether is Attempting a Similar Strategy

Tether is also executing a similar strategy, albeit on a much smaller scale. After the Drift vulnerability attack in April, Tether pledged to provide up to $147.5 million in funding for recovery.

This deal set USDT as the settlement asset for Drift, establishing a Tether-supported USDT liquidity pool for designated market makers and funding a trading incentive layer.

In other words, Tether leveraged the Drift crisis to flip the base currency of a major perpetual contract DEX on Solana.

Before this deal, USDC's stablecoin scale on Solana was more than twice that of USDT, a trend that was prevalent across the entire chain. Both sides of the stablecoin battle have recognized the same thing: perpetual contracts are the key battleground for stablecoins.

Overall, to leverage the momentum brought by the GENIUS Act, Coinbase and Circle need broader distribution channels, and the Hyperliquid deal may be key.

It allows USDC to penetrate the core battleground of on-chain trading, riding the fastest-growing track in the crypto space, and conditions to directly compete with USDT and Binance in scale.

This may also be a bet on the relaxation of domestic regulatory boundaries. CFTC Chairman Selig has explicitly stated a desire for perpetual contracts to be offered within the U.S., and the passage of the CLARITY Act may ensure this.

Reports this week indicate that the SEC is preparing to establish an "innovation exemption" under its "crypto project" initiative, which would allow crypto-native platforms to offer tokenized U.S. stock trading on-chain under looser registration requirements.

Combined with the stance of the CFTC led by Selig and the SEC reforms pushed by Atkins, Coinbase seems to be laying the groundwork in advance, allowing Hyperliquid to enter the U.S. market with USDC already embedded within.

Bankless: Perpetual Trading Finds Its Moment

All of this is speculative, but it aligns closely with how Wall Street and institutional investors view Hyperliquid: they see it as an entry point into the upcoming new landscape of perpetual contracts. This is perhaps the strongest tailwind an asset can encounter.