Half a year ago, Circle lost the stablecoin bidding contest on Hyperliquid. Half a year later, Circle and Coinbase proactively staked HYPE, committing to channel 90% of USDC reserve yields on Hyperliquid back into the protocol in exchange for USDC's status as an "Aligned Quote Asset."

USDH bows out; USDC takes center stage.

Over the past 24 hours, Hyperliquid, Coinbase, and Native Markets each released official statements.

Hyperliquid has activated AQAv2 rules. USDC becomes the sole Aligned Quote Asset, with Coinbase serving as the "Treasury Deployer," funneling the majority of USDC reserve yields back into the protocol treasury; Circle acts as the "Technical Deployer," responsible for CCTP cross-chain transfers and native issuance infrastructure. Both parties have each staked 500k HYPE as performance collateral—should the Treasury Deployer’s yield fall short, their staked HYPE will be liquidated. Future HIP-4 prediction markets and validator-operated perpetual markets will mandate USDC as the quote asset.

Coinbase officially confirmed a substantial increase in HYPE staking positions. Native Markets sold the USDH brand asset to Coinbase per agreed terms; the USDH market is being phased out, with existing holdings redeemable at face value via the issuer Bridge. Native Markets founder @fiege_max described this as "Hyperliquid’s largest victory to date."

Previously, Circle retained all USDC reserves circulating on Hyperliquid and used them to purchase U.S. short-term Treasuries to earn interest. Now, Coinbase assumes custody of USDC on Hyperliquid and redirects approximately 90% of the generated revenue into Hyperliquid’s auxiliary fund to fuel HYPE buybacks and burns.

In September last year, Hyperliquid held a public auction for a stablecoin aligned with "Hyperliquid," with Circle and startup team Native Markets competing side by side. Native Markets emerged victorious and launched USDH, which directed around 50% of its reserve yield to Hyperliquid’s auxiliary fund.

However, the market and users did not embrace USDH.

USDH supply on Hyperliquid stands at roughly $102 million, while USDC reaches $5.08 billion. The former contributes about $1.6 million annually to the auxiliary fund; the latter contributes zero.

Hyperliquid’s Crypto perpetuals have always been quoted in USDC—the platform’s largest trading segment. Among HIP-3 deployers, Trade[XYZ], which captures nearly 94% of the entire segment’s volume, also chose USDC as its quote asset. A few HIP-3 exchanges adopting USDH, such as Markets and Felix, have long suffered from fragmented liquidity and elevated execution costs. Retail users experience suboptimal friction when swapping between USDH and USDC.

Additionally, Hyperliquid’s newly launched prediction market HIP-4 was deployed using USDH as the quote asset, inheriting liquidity fragmentation from day one.

Continuing to push USDH would represent a strategic self-imposed limitation; abandoning it would render the September auction and Native Markets’ six-month effort obsolete. Hyperliquid found a third path: enabling Circle and Coinbase to transform USDC into an aligned asset and capture the ~$5 billion in accumulated yield already sitting on the platform.

Circle missed out on USDH in September. This time, it didn’t wait.

One additional detail: On February 16th, Hyperliquid hired @Sterling_hl, former head of on-chain business at Circle, as BD. Three months later, Coinbase and Circle both entered the arena.

The net beneficiaries of this collaboration are the previously USDH-using HIP-3 exchanges. Kinetiq-operated Markets issued a statement confirming a seamless migration to USDC; Felix founder @0xBroze likewise affirmed acceptance of the outcome. These two platforms had long struggled with USDH-USDC dual-track inefficiencies in cross-margining, liquidity depth, and user experience—now finally unified within a single liquidity pool.

Application-layer projects integrated with USDH on HyperEVM will simultaneously enter migration phase.

Two HIP-3 deployers not using USDH became among the few losers. Dreamcash uses USDT0 as its quote asset, while HyENA uses USDe. Hyperliquid’s documentation explicitly states that future HIP-4 prediction markets and validator-operated contract markets must adopt Aligned Quote Assets. To progress, these two exchanges must convince Tether and Ethena to accept equally stringent 90% reserve yield sharing terms.

To assess the impact of this partnership on HYPE, consider the following data comparison.

During the USDH era, Hyperliquid earned approximately $1.6 million annually from stablecoin operations. Assuming USDC’s $5 billion on-platform balance remains constant and a 3.5% Treasury yield, Hyperliquid’s stablecoin business could generate annual revenue between $13.7 million and $16 million.

This represents nearly a hundredfold increase.

This capital will not be distributed as dividends but fully reinvested via Hyperliquid’s current mechanism into HYPE buybacks and burns. The added $14–16 million in annual revenue equates to an extra $400,000 daily burn capacity; currently, Hyperliquid’s average daily buyback is ~$1.5 million, representing a 26% immediate uplift.

Even more significant is the structural shift in Hyperliquid’s revenue composition.

Historically, Hyperliquid derived nearly all income from trading fees—a classic traffic-driven model. Now, it gains a new cash flow stream indexed to deposit size, exhibiting significantly lower volatility than trading volume. During this cycle’s downturn, stablecoin deposits declined only 15% from historical highs, while monthly trading volume dropped 55%. The anti-cyclical resilience of buybacks has been materially enhanced.

Beyond this, Coinbase and Circle each stake 500k HYPE—direct, immediate demand pressure.

On the flip side of bringing USDC into Hyperliquid lies the integration of Coinbase and Circle into Hyperliquid.

Hyperliquid is a PerpDEX registered in a offshore jurisdiction, having operated for years in the regulatory gray zone under U.S. oversight. Coinbase is the largest U.S.-listed compliant crypto exchange; Circle is the largest stablecoin issuer under the U.S. regulatory framework. The simultaneous HYPE staking and operational alignment between these two U.S. compliance leaders constitute a systemic upgrade to Hyperliquid’s regulatory narrative.

The CLARITY Act is currently under review in the U.S. Senate, with high probability of passage. If enacted, the legal boundaries and liability frameworks for DeFi protocols will be redefined, partially eroding the protective shield of offshore structures. In this critical window, deep binding with two major U.S. compliance anchors effectively secures a forward-looking insurance policy against regulatory shifts.

In a farewell statement, Native Markets’ founder wrote that this collaboration aligns the protocol “with the strongest voices in U.S. crypto policy.” This is no mere rhetoric.

Original: BlockBeats