USDH Being Absorbed by Coinbase: Hyperliquid's Strategic Play for Gains

Original｜Odaily Planet Daily (@OdailyChina)

Author｜Wenser (@wenser 2010)

Last September, the dispute over Hyperliquid's native stablecoin USDH once became the focus of the industry. Now, this once highly anticipated stablecoin has suddenly entered its "exit moment."

Last night, Coinbase announced that it would become the official USDC treasury deployer on Hyperliquid, while Native Markets, the issuer of Hyperliquid's native stablecoin USDH, granted Coinbase the right to purchase the USDH brand assets. Subsequently, the USDH market will be gradually phased out, during which users can still exchange USDH for USDC or fiat currency without any fees.

With that, the once-famous USDH has become an asset absorbed by Coinbase, and USDC has been formally established as the official stablecoin and quote asset for Hyperliquid. In this article, Odaily Planet Daily will briefly analyze the inside story and subsequent impact of this event.

USDH Exits, USDC Rises: The Economics Behind $5 Billion

The grand drama of the "Hyperliquid ecosystem stablecoin war" has ultimately ended in a three-way win for Coinbase & Circle, Hyperliquid, and Native Markets, the issuer of USDH.

Coinbase has used this opportunity to further deepen its ties with the Hyperliquid ecosystem. Hyperliquid has secured the lion's share of the USDC stablecoin reserve yield within its ecosystem. Native Markets, the ultimate victor of the now-defunct USDH, has reaped its rewards by selling USDH brand assets.

Coinbase & Circle: Deepening Ties with the Hyperliquid On-Chain Economy, Continually Increasing HYPE Investment

Currently, the scale of USDC on Hyperliquid is approximately $5.164 billion, a 2x increase year-over-year.

As an official partner of USDC that shares in its revenue, this move by Coinbase is undoubtedly aimed at forging a deep bond with the Hyperliquid ecosystem.

Furthermore, according to official announcements from Hyperliquid, both Coinbase (as a capital deployer) and Circle (responsible for the technical deployment of CCTP and native cross-chain infrastructure) have committed to staking HYPE to activate AQAv2 (Aligned Quote Asset v2).

It's worth noting that last September, Circle had already purchased HYPE tokens, and its HYPE token staking scale has now increased to around 500,000 tokens.

Hyperliquid: Reaps the Majority of USDC Reserve Yield, Benefits from Coinbase Alliance Status

As for the biggest winner of this collaboration, it is undoubtedly Hyperliquid, serving as the ecosystem's foundation.

According to the official announcement, Coinbase will share the vast majority of the reserve yield revenue with the Hyperliquid protocol moving forward. Although the specific split ratio has not been disclosed, based on the previous USDH revenue sharing mechanism, Hyperliquid would effectively receive approximately 90% of the reserve yield.

As calculated by community members, based on a scale of $4.7 billion and an interest rate yield of 3.8%, this revenue corresponds to approximately $160 million; in other words, this equates to a daily HYPE token buyback of $440,000.

Moreover, with the CLARITY Act passing a vote in the US Senate Banking Committee, the deep partnership between Hyperliquid and Coinbase also signifies that HYPE and Hyperliquid have gained certain support on the US regulatory front.

Native Markets: USDH's Historical Mission Complete

As the issuer of Hyperliquid's native stablecoin USDH, Native Markets may appear to be the biggest loser in this "absorption event," but judging from its official statement, its outcome can be seen as a successful exit with honor.

On one hand, USDH provided a precedent and template for Coinbase and the Hyperliquid protocol to share USDC revenue. On the other hand, Coinbase appears to have directly acquired the brand assets related to USDH this time. The USDH stablecoin issued by the Native Markets team can be considered "acquired by Coinbase," thus providing the team with certain financial returns.

Going forward, Native Markets has stated it will remain independent and seek development in other areas.

After USDH's Exit: In This Win-Win-Win Scenario, the Only Losers Are USDH Users

Of course, Native Markets' exit hasn't been met with unanimous "praise." Hyperliquid community members have also voiced criticism over its claims of having "gotten a seat at the negotiating table."

Some believe that USDH's exit signifies a complete regression from the era of decentralization.

Others have pointed out that, initially, the vote for the USDH stablecoin issuer should have favored Paxos, as they at least consider users and stablecoin growth, whereas those who voted for Native Markets were merely aligning for internal interests. In the end, users got nothing. These sentiments have also garnered support and agreement from many.

With this, the drama from a year ago—a tale of a "dominant player's pursuit" and "defiance of a giant"—has finally come to a close.

Yet, looking back now at the "handshake agreement" between Hyperliquid, Coinbase, and Circle, it inevitably evokes a sense of lament and a touch of irony.

Ultimately, it all boiled down to the distribution of interests, not the once-chanted slogans of "for the community" or "for Hyperliquid."

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