Original title: How USDC Wins theHyperliquid Deal Original author: David Christopher Compiled by: Peggy
Editor's Note: The competition among stablecoins is shifting from "who is more compliant" to "who can control more transaction entry points".
Following the passage of the GENIUS Act, USDC did indeed gain new growth momentum. Circle's US-based background and compliance advantages allowed USDC to begin catching up with and even temporarily surpass USDT in terms of trading volume. However, in terms of market share, the landscape has not changed significantly: USDT still holds the majority of the stablecoin market share and maintains a strong position in markets outside the US.
This is the core meaning behind Coinbase and Circle's deals with Hyperliquid. On the surface, it's a stablecoin asset switch: USDC has once again become Hyperliquid's primary pricing asset, and Hyperliquid receives a higher revenue share. But at a deeper level, it's a battle for distribution channels.
Hyperliquid is the core platform for the on-chain perpetual contract market, and perpetual contracts naturally rely on stablecoins as pricing and settlement assets. Whoever becomes the primary quote asset in these markets will gain more trading volume, margin, deposits and withdrawals, and long-term use cases from on-chain activities. Tether has already proven this path through Binance; USDT's strength comes not only from its issuance size but also from its deep integration into the global trading system.
For Coinbase and Circle, Hyperliquid offers a global reach that is difficult for them to replicate. Coinbase, constrained by regulations, cannot cover a wider market like Binance or Hyperliquid, so embedding USDC into Hyperliquid's underlying transaction layer may be a realistic way for it to counter the network effect of USDT.
The most noteworthy aspect of this article is not whether Coinbase is offering concessions, nor how much of a cut Hyperliquid will receive, but rather that USDC is attempting to transform from a "US-compliant stablecoin" into a broader "on-chain transaction base currency." As perpetual contracts continue to grow, the main battleground of the stablecoin war may increasingly focus on these high-frequency trading scenarios.
The following is the original text:
Tether still dominates Binance, but Coinbase has just reintegrated USDC into Hyperliquid. The battle for stablecoin distribution channels is becoming increasingly fierce.
Hyperliquid is becoming one of the most sought-after assets in the crypto industry right now. Last week, 21Shares and Bitwise launched their spot HYPE ETFs on US trading platforms, with Grayscale and VanEck following suit. Behind the influx of institutional funds is a longer-term competition: who will get a share of the trading platform's revenue?
Last fall, Hyperliquid launched a public RFP (Recommendation Policy Forum) to solicit proposals for its native stablecoin, USDH, aiming to reclaim the profits previously flowing to Coinbase and Circle. At the time, approximately $5.6 billion in USDC was held in Hyperliquid's cross-chain bridges, generating about $200 million in interest income annually, but this income flowed to its centralized competitors. The platforms that actually created the demand did not benefit from it. Ultimately, Native Markets defeated competitors such as Paxos and Ethena in the community vote, and USDH was subsequently launched.
Bankless previously reported on the bidding war surrounding USDH for Hyperliquid.
Just last week, Native Markets sold USDH to Coinbase and agreed to gradually discontinue the stablecoin tied to Hyperliquid's interests, allowing USDC to return as the exchange's primary pricing asset. In exchange, 90% of the related revenue will flow back to Hyperliquid, although the specific revenue capture mechanism remains unclear. This deal is widely interpreted as a victory for Hyperliquid, with Coinbase and Circle bearing the cost. This interpretation is understandable, but not entirely accurate.
What Hyperliquid gained from this deal is clear: significantly improved revenue sharing, roughly double that of the USDH model; stronger regulatory resources through an alliance with one of the most influential voices in the US crypto industry in Washington; and a return to the stablecoin experience that the exchange originally built around and that users already highly trusted. Especially in the HIP-3 market, which has garnered significant attention for Hyperliquid over the past six months, USDC remains the primary asset used.
From Coinbase and Circle's perspective, the deal is largely seen as a boost to their image: it allows them to forge a closer relationship with one of the most crypto-native and successful projects of the previous cycle. However, if we consider USDC's current market position alongside the growth trajectory of the perpetual contract market, another beneficiary emerges.
What Coinbase and Circle truly gained was the distribution channel for USDC. And this large-scale distribution may be more important than any other part of the deal.
How do they perform at home?
Since the passage of the GENIUS Act, USDC has indeed demonstrated strong growth momentum. Circle was well-prepared for the new environment shaped by this regulatory framework: USDC is headquartered in the United States and has always been compliance-oriented. This positioning has translated into actual trading volume.
According to Allium data, USDC trading volume reached $355 billion in May 2026, surpassing USDT for the first time in recent months, reflecting its accelerating growth since the passage of the GENIUS Act last July.
However, the structural pattern of the stablecoin market has not changed.
In April 2025, just before the passage of the GENIUS Act, USDT held a 67% share of the stablecoin market, while USDC held 27.6%. A year later, USDT's share had risen to 67.3%, and USDC to 28.1%. The change was less than half a percentage point. In other words, despite the accelerating growth in USDC's trading volume, its supply share remained virtually unchanged.
A report released by Artemis last October showed that the United States is the strongest market for USDC. Considering the correlation between USDC growth and the US regulatory environment after the passage of the GENIUS Act, it is relatively safe to conclude that the United States is also the primary source of USDC growth.
The problem is precisely that the US is also the market where the most new competitors are entering. 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. They are all eroding USDC's core market.
If the pressure from the US domestic market intensifies further, USDC will lack a sufficiently stable base overseas. In almost all markets outside the US, USDT remains the default stablecoin for the US dollar, widely used for savings, investment, and trading, and continues its aggressive expansion. Over the past year, several new blockchains have been launched specifically to expand USDT distribution; simultaneously, Tether launched USAT, attempting to enter the US regulatory sphere under the GENIUS Act compliance framework, directly impacting USDC's domestic market.
Coinbase and Circle certainly have the momentum to continue expanding, but the window of opportunity for them to secure distribution channels before competition intensifies is not long. Trading platforms, especially the perpetual contract market, are the best place to compete for this distribution gateway.
Bankless previously reported on Tether's launch of the USA₮ stablecoin, which is regulated in the United States.
Perpetual contracts are the real battleground.
Like stablecoins, perpetual contracts are one of the fastest-growing categories in the crypto industry, with year-on-year growth rates consistently in the double or even triple digits.
Perpetual contracts and stablecoins are structurally highly intertwined, as stablecoins are typically the primary denominated asset in the perpetual contract market. USDT has already established a significant presence in this space: on Binance, the world's largest perpetual contract trading platform, most trading markets use USDT as the primary denominated asset. Users trading in Binance's core markets primarily complete their transactions using USDT. This further solidifies the supply of USDT within the trading platform, naturally creating a downstream pull effect on deposits, withdrawals, and on-chain activities surrounding the platform.
Despite Hyperliquid's trading volume being far lower than Binance's, it is already the largest on-chain perpetual contract trading platform, holding a 30% share of the entire on-chain perpetual contract market and controlling 46% of the open interest. This position remains solid despite repeated competitive challenges.
Meanwhile, while Hyperliquid is not a centralized exchange, it has clearly achieved the ability to compete with centralized platforms. As of April 30, its trading volume was approximately 50% of Bybit's, 30% of OKX's, and 79% of Coinbase International's. All of these combined are only equivalent to about 13% of Binance's trading volume. Crucially, this number continues to grow, and the growth curve is pointing in only one direction.
Despite being in its early stages, Hyperliquid's dominant position in the on-chain perpetual contract market, and its trading volume that has matched, and in some cases surpassed, centralized exchanges, gives it global reach approaching Binance's coverage outside the US. This also opens a new avenue for Coinbase and Circle: they can leverage Hyperliquid to compete with Tether and transform it into a structured distribution channel for USDC.
Coinbase has chosen its own battlefield.
However, this raises a question: Why doesn't Coinbase directly develop its own perpetual contract business and build its own distribution channel?
The reason lies in the fact that Coinbase is constrained by its regulatory framework, limiting the scope of its customer base and the number of markets it can list on. Currently, Coinbase covers approximately 100 countries, slightly more than half of Binance's 180 countries. Hyperliquid, on the other hand, benefits from a more "relaxed" operating environment, enabling it to reach a wider market. This gives it a certain advantage over both Binance and Coinbase, an advantage that Coinbase itself finds difficult to replicate.
Therefore, Coinbase and Circle chose to let Hyperliquid handle global reach, with USDC serving as the underlying asset in these markets. This deal allowed them to share in the upside potential through the growth in USDC supply and the resulting revenue, without having to get involved in a jurisdictional battle they were destined to lose. They only received a portion of the economic benefits, but it was a scale that Coinbase could not reach on its own.
Tether is also replicating the same strategy.
Tether is also working on its own version, albeit on a much smaller scale. Following the Drift attack in April, Tether pledged up to $147.5 million to support its recovery. This deal makes USDT the settlement asset for Drift, establishes Tether-backed USDT quotas for designated market makers, and funds the trading incentive layer.
In other words, Tether, by leveraging the Drift crisis, changed the underlying currency of a major Solana perpetual contract DEX. Prior to this transaction, USDC had more than twice the presence of USDT among stablecoins on Solana, a situation prevalent across the entire Solana chain.
Both sides in the stablecoin war have realized the same thing: the perpetual contract market is a key battleground in the stablecoin competition.
Overall, in order to capitalize on the growth momentum brought by the GENIUS Act, Coinbase and Circle need more distribution channels, and this Hyperliquid deal may be just such an entry point: allowing USDC to spread in the core scenarios of on-chain transactions, enter one of the fastest-growing categories in the crypto industry, and gain the possibility of competing with USDT and Binance on a similar scale.
This could also be a bet on further opening up of US domestic regulatory boundaries. CFTC Chairman Selig has made it clear that he hopes perpetual contracts can be traded in the US, and the passage of the CLARITY Act could ensure this. Reports this week indicate that the SEC is preparing to introduce an "innovation exemption" under its Project Crypto program, allowing crypto-native platforms to offer on-chain trading of tokenized US stocks with lighter registration requirements.
Considering the CFTC's attitude under Selig's leadership and the SEC's regulatory direction driven by Atkins, Coinbase seems to be making a proactive move: to enable Hyperliquid to gain distribution capabilities in the US market, given that USDC has already been installed as a core asset.
Bankless has previously reported that perpetual contract trading is entering its window of opportunity.
Of course, the above remains speculative. But it does align with how Wall Street and institutional players might view Hyperliquid: it's their gateway into the future perpetual contract framework. For an asset, this is almost one of the most attractive tailwinds.
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