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JPMorgan cut its earnings estimates for Circle and Coinbase, citing a new agreement between the two stablecoin issuers and Hyperliquid that the bank says weakens USDC economics. Under the deal, Coinbase will pass 90% of the yield earned on USDC reserves held on Hyperliquid to the platform itself, replacing the previous 50/50 split with Circle.
Why it matters
The revenue-sharing model has been the structural argument for USDC: the issuer earns yield on reserves backing the stablecoin, and distribution partners share the upside. JPMorgan analysts framed the new split as a "prisoner's dilemma," arguing that once one major distribution venue extracts near-total concessions, rivals can credibly demand the same. Hyperliquid currently holds roughly $6 billion in USDC, about 8% of circulating supply, making the concession material rather than symbolic.
Market impact
For Circle, the shift compresses a revenue stream the company has consistently sold to investors as a moat. For Coinbase, the near-term hit is the loss of half its platform-side USDC yield on a $6B pool, partially offset by deeper liquidity on one of the largest decentralized perps venues. Both stocks are likely to read through to other USDC distribution deals as the new reference point.
Frequently asked questions
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What did JPMorgan actually change in its forecasts?
JPMorgan cut earnings estimates for both Circle and Coinbase, citing a new USDC distribution agreement with Hyperliquid that routes 90% of platform-side reserve yields to Hyperliquid itself.
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How much USDC does Hyperliquid hold?
Hyperliquid currently holds roughly $6 billion in USDC, which JPMorgan estimates is about 8% of total USDC circulating supply.
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Why did the old revenue split change?
The new deal replaces the prior 50/50 split between Coinbase and Circle with a 90/10 arrangement favoring Hyperliquid, which JPMorgan framed as a "prisoner's dilemma" for USDC distribution.
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What does this mean for Circle specifically?
For Circle, the change compresses a reserve-yield revenue stream the company has marketed as a structural moat, since less of the platform-side yield stays within the issuer-distributor chain.
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Why does this matter beyond Circle and Coinbase?
JPMorgan's note warned the precedent sets a new floor for USDC distribution negotiations, giving other large venues leverage to demand similar concessions from issuers and partners.
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