Original Title: How USDC Wins theHyperliquidDeal
Original Author: David Christopher
Original Translator: Peggy
Editor's Note: The competition among stablecoins is shifting from "who is more compliant?" to "who can capture more trading entrances?"
After the passage of the "GENIUS Act," USDC has indeed gained new momentum for growth. Circle's U.S. domestic background and compliance advantages have allowed USDC to start catching up with, and even periodically surpassing, USDT in trading volume. However, there has been no significant change in market share: USDT still holds the majority of the stablecoin market and maintains a strong position in markets outside the U.S.
This is also the core significance of the trading between Coinbase, Circle, and Hyperliquid. On the surface, this is a stablecoin asset switch: USDC has become the main pricing asset of Hyperliquid again, and Hyperliquid gains a higher revenue share. But at a deeper level, this is a fight for distribution channels.
Hyperliquid is the core platform for on-chain perpetual contracts, and perpetual contracts naturally rely on stablecoins as pricing and settlement assets. Whoever becomes the main quote asset in these markets can gain more trading volume, margin, deposits and withdrawals, and long-term usage scenarios stemming from on-chain activities. Tether has already proven this path through Binance, where USDT's strength comes not only from its issuance scale but also from its deep embedding in the global trading system.
For Coinbase and Circle, Hyperliquid offers global reach capabilities that are hard for them to replicate. Coinbase is limited by regulatory constraints and cannot cover as broad a market as Binance or Hyperliquid, so embedding USDC into the underlying trading of Hyperliquid may be a realistic path for countering USDT's network effects.
The most noteworthy aspect of this article is not whether Coinbase is sharing profits or how much revenue Hyperliquid receives; it is that USDC is attempting to transform from being the "U.S. compliant stablecoin" to a more broadly accepted "on-chain transactional currency." As perpetual contracts continue to grow, the main battleground of the stablecoin war may become increasingly concentrated in these high-frequency trading scenarios.
Below is the original text:
Tether still dominates Binance, but Coinbase has just reintroduced USDC into Hyperliquid. The competition for stablecoin distribution channels is becoming increasingly intense.
Hyperliquid is becoming one of the most contested assets in the current crypto industry. Last week, the spot HYPE ETF launched by 21Shares and Bitwise went live on U.S. trading platforms, with Grayscale and VanEck following closely. Behind the rush of institutional funds is a longer competition: who can secure a portion of this trading platform's economic benefits.
Last fall, Hyperliquid initiated a public RFP to solicit proposals for its native stablecoin USDH, aiming to reclaim revenue that had previously flowed to Coinbase and Circle. At the time, around $5.6 billion USDC was stored in Hyperliquid's cross-chain bridge, yielding about $200 million in annual interest, but this revenue flowed to its centralized competitors. The platform that truly creates demand did not benefit from it. Ultimately, Native Markets won against bidders like Paxos and Ethena in a community vote, and USDH was subsequently launched.
Bankless has reported on the bidding war surrounding USDH at Hyperliquid.
But just last week, Native Markets sold USDH to Coinbase and agreed to gradually phase out this stablecoin tied to Hyperliquid's interests, allowing USDC to become the primary pricing asset of the trading platform again. In exchange, 90% of the relevant revenue will flow back to Hyperliquid, although the specific revenue capture mechanism is still unclear. This transaction is widely interpreted as a victory for Hyperliquid, with the cost borne by Coinbase and Circle. This interpretation is understandable but not entirely accurate.
What Hyperliquid clearly gains from this transaction is significantly improved revenue sharing, about twice that of the USDH model; stronger regulatory resources gained through alliances with some of the most influential voices in the U.S. crypto industry in Washington; and it also re-enters the stablecoin experience that the trading platform was originally built around, which users already trust heavily. Especially in the HIP-3 market, which has garnered significant attention for Hyperliquid over the past six months, USDC remains the primary asset utilized.
From Coinbase and Circle's perspective, this transaction is seen more as an image boost: they establish a closer relationship with one of the most crypto-native and successful projects from the previous cycle. But if we compare USDC's current market position with the growth trajectory of the perpetual contract market, another beneficiary emerges.
What Coinbase and Circle truly gain is the distribution channel for USDC. And this large-scale distribution may be more important than any other part of this transaction.
How Does It Perform at Home?
Since the passage of the "GENIUS Act," USDC has indeed shown strong growth momentum. Circle has long been prepared for this new environment shaped by the regulatory framework: USDC is headquartered in the United States and has always been compliance-oriented. This positioning has translated into actual trading volumes.
Allium data shows that by May 2026, USDC's trading volume reached $355 billion, surpassing USDT for the first time in recent months, also reflecting a rapid acceleration of growth since the passage of the "GENIUS Act" last July.
However, the structural landscape of the stablecoin market has not changed.
In April 2025, just before the passage of the "GENIUS Act," USDT held 67% of the stablecoin market share, while USDC held 27.6%. A year later, USDT's share was 67.3%, and USDC's was 28.1%. The changes for both were less than half a percentage point. In other words, although USDC's trading volume is accelerating, its supply share has changed very little.
A report released by Artemis last October showed that the U.S. is USDC's strongest market. Considering the correlation between USDC's growth post-"GENIUS Act" and the U.S. regulatory environment, it can be relatively safely concluded that the U.S. is also the primary source of USDC's growth.
But the problem lies in the fact that the U.S. is the very market where the new competitors are flooding in most. Stripe has clearly entered the stablecoin business through Tempo and other acquisitions; major financial institutions are also launching their own domestic stablecoins that comply with the "GENIUS Act" requirements. They are all encroaching on USDC's most core market.
If the pressure on the domestic U.S. market increases, USDC does not have a sufficiently solid foundation overseas to rely on. In almost all markets outside the U.S., USDT is still the default U.S. dollar stablecoin, widely used for saving, investing, and trading, and it is continuing to expand aggressively. In the past year, multiple new chains have been launched specifically to expand USDT distribution; at the same time, Tether has also introduced USAT, trying to enter the U.S. regulatory framework under the "GENIUS Act" and directly impact USDC's domestic market.
Coinbase and Circle indeed have the momentum to continue expanding, but the window for them to lock in distribution channels before competition heats up is not wide. Trading scenarios, especially the perpetual contract market, are the most suitable places to compete for this distribution entry.
Bankless recently reported on Tether launching the U.S.-regulated USA₮ stablecoin.
Perpetual Contracts Are the Real Battleground
Like stablecoins, perpetual contracts are also one of the fastest-growing categories in the crypto industry, with year-on-year growth maintaining double-digit to even triple-digit levels.
Perpetual contracts and stablecoins are structurally highly interlinked, as stablecoins are usually the main pricing asset in the perpetual contract market. USDT has already secured an important position in this field: on Binance, the world's largest perpetual contract trading platform, most trading markets use USDT as the main pricing asset. Most users trading on Binance's core market primarily do so through USDT. This further consolidates USDT's supply within the trading platform and naturally creates downstream pull-effect on deposits, withdrawals, and on-chain activities related to that trading platform.
Although Hyperliquid's trading volume is far lower than Binance's, it has become the largest on-chain perpetual contract trading platform, holding a 30% share of the entire on-chain perpetual contract market and controlling 46% of open contracts. Despite repeated competitive challenges, this position remains solid.
At the same time, although Hyperliquid is not a centralized trading platform, it has clearly acquired the ability to compete on par with centralized platforms. As of April 30, its trading volume was about 50% of Bybit's, 30% of OKX's, and 79% of Coinbase International's. All of these add up to only about 13% of Binance's trading volume. But the key is that this number continues to grow, and the growth curve points in only one direction.
Although still in its early stages, Hyperliquid's dominant position in the on-chain perpetual contract market, combined with its ability to match or even exceed trading volumes of some centralized platforms at times, gives it a global reach capability close to that of Binance in markets outside the U.S. This also opens a new avenue for Coinbase and Circle: they can leverage Hyperliquid to compete with Tether and transform it into a structural distribution channel for USDC.
Coinbase Chose Its Battlefield
However, this also raises a question: why doesn't Coinbase further develop its own perpetual contract business and build this distribution channel itself?
The reason is that Coinbase is constrained by the regulatory framework, limiting the client scope it can serve and the number of markets it can enter. Currently, Coinbase covers about 100 countries, a little more than half of the 180 countries covered by Binance. Hyperliquid, benefiting from a more "loose" operational environment, can reach a broader market, giving it certain advantages compared to both Binance and Coinbase, which are difficult for Coinbase to replicate.
Therefore, Coinbase and Circle choose to have Hyperliquid take on the role of global reach, while USDC is introduced as the underlying asset into these markets. This transaction allows them to share the upside potential through USDC supply growth and the resulting income without having to personally get involved in a jurisdictional battle that is likely to be unwinnable. They are only capturing a portion of the economic benefits, but it is a scale that Coinbase cannot reach alone.
Tether Is Also Replicating the Same Strategy
Tether is also doing its version, but on a much smaller scale. After the Drift attack incident in April, Tether committed up to $147.5 million to support its recovery. This transaction makes USDT the settlement asset for Drift, while establishing Tether-backed USDT quotas for designated market makers and providing funding for trading incentives.
In other words, Tether has used Drift's crisis to change the base currency of a major Solana perpetual contract DEX. Before this transaction, USDC's presence as a stablecoin on Solana was more than twice that of USDT, and this pattern is quite common across the entire Solana chain.
Both sides of the stablecoin war have realized the same thing: the perpetual contract market is a key battlefield in the competition for stablecoins.
In general, to capitalize on the growth momentum brought by the "GENIUS Act," Coinbase and Circle need more distribution channels, and this Hyperliquid transaction may provide such an entry: allowing USDC to spread in the core scenarios of on-chain trading, entering one of the fastest-growing categories in the crypto industry, and gaining the potential to compete on the same scale as USDT and Binance.
This may also be a further bet on the opening of the U.S. domestic regulatory boundaries. CFTC Chairman Selig has clearly stated that he hopes perpetual contracts can be traded openly in the U.S., and the passage of the "CLARITY Act" may ensure this. Reports this week indicate that the SEC is preparing to launch an "innovation exemption" under its Project Crypto plan, allowing crypto-native platforms to provide tokenized U.S. stock on-chain trading under lighter registration requirements.
With the CFTC's attitude under Chair Selig and the SEC's regulatory direction under Chair Atkins, Coinbase seems to be planning ahead: enabling Hyperliquid to gain distribution capabilities in the U.S. market with USDC already established as a core asset.
Bankless has reported that perpetual contract trading is entering its own window of opportunity.
Of course, the above remains speculative. But it does fit the way Wall Street and institutional players may view Hyperliquid: it is their entry point into the future framework of perpetual contracts. For an asset, this is arguably one of the most attractive tailwinds.
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