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JPMorgan warns Hyperliquid deal could pressure USDC economics
JPMorgan said Hyperliquid holds about $6 billion of USDC, roughly 8% of supply, and expects Circle and Coinbase to face a near-term earnings headwind from the revised arrangement.
JPMorgan warned that changes in a partnership between Hyperliquid and USDC issuer Circle could create a revenue headwind for Circle and its exchange partner Coinbase, while posing a larger long term risk to USDC economics, according to CoinDesk.
The bank argued the new setup creates a so-called prisoner’s dilemma, encouraging Circle and Coinbase to compete for USDC distribution in ways that may weaken each other’s earnings rather than expanding the overall pie.
JPMorgan estimated Hyperliquid holds about $6 billion in USDC, or roughly 8% of the circulating supply, and said Hyperliquid processed more than $150 billion in trading volume in July as its share of derivatives activity grows.
Under the revised arrangement, Coinbase will classify USDC on Hyperliquid as on-platform, taking income generated by reserves and paying 90% of it to Hyperliquid, a structure JPMorgan said differed from the prior near-even revenue split between Coinbase and Circle. The bank cut earnings estimates for both firms, citing the Hyperliquid changes along with weaker crypto trading volumes and asset prices.