Table of Contents
Over the past week, three major developments have introduced the need to reevaluate the HYPE thesis, which has traditionally centered around Hyperliquid serving as crypto’s premier perpetual futures venue and a suite of subpoints, including HYPE's buyback system, Hyperliquid leading the revenue meta, new markets going live (like the widely covered silver and oil markets), etc.
First, Coinbase and Circle entered into a landmark arrangement with Hyperliquid that sunsets USDH and turns USDC into a protocol-aligned stablecoin under AQAv2, with both firms committing capital to HYPE and sharing reserve yield with the protocol. Second, Bloomberg reported that traditional financial incumbents, including CME Group and the New York Stock Exchange, are pressing U.S. regulators to scrutinize Hyperliquid, triggering a short-lived selloff and reigniting debate around regulatory risk. Third, SpaceX pre-IPO price discovery began happening on Hyperliquid through a new market launched by TradeXYZ, pushing the platform deeper into territory historically dominated by traditional financial infrastructure.
Together, the events of the past week strengthened the thesis of Hyperliquid becoming the "House of all Finance," with the protocol demonstrating it is evolving into something closer to financial-market infrastructure: a venue for liquidity, price discovery, stablecoin economics, and institutional participation.
Coinbase, AQAv2, and the End of USDH
The most consequential development of the week was Hyperliquid’s agreement with Coinbase and Circle around AQAv2.
Under the arrangement, Coinbase becomes the official treasury deployer of USDC on Hyperliquid, while Circle serves as the technical deployer responsible for minting, redemption, and native cross-chain transfers through Cross-Chain Transfer Protocol (CCTP). Both firms are also financially aligning themselves with the ecosystem through HYPE staking. Coinbase reportedly accumulated roughly $25 million worth of HYPE over the past week and staked the position, while Circle is staking approximately 500,000 HYPE and moving toward validator participation.
At the same time, Native Markets is selling the USDH brand assets to Coinbase, effectively sunsetting USDH as an independent quote asset. Instead of competing with USDC, the economic logic behind USDH (protocol alignment through yield sharing) is now being embedded directly into Hyperliquid’s primary stablecoin.
Doing so solves one of Hyperliquid's largest friction points. Previously, USDH offered economic alignment with the protocol but lacked the liquidity depth and network effects of an incumbent stablecoin. USDC had liquidity and familiarity, but historically created little direct economic value for Hyperliquid itself.
Hyperliquid framed the transition as a response to consistent feedback from users and developers who argued that liquidity fragmentation created unnecessary friction across the ecosystem. Instead of forcing traders, deployers, and market builders to choose between aligned incentives and deeper liquidity, Hyperliquid is consolidating around a single financial rail.
As a result, HIP-3 deployers launching new markets no longer need to decide between aligned incentives and liquid markets. Canonical HIP-4 outcome markets are expected to eventually standardize around USDC as their quote asset in a future network upgrade. New users bridging into Hyperliquid will now face less friction, particularly as Circle’s CCTP infrastructure makes USDC movement increasingly native rather than bridge-dependent.
Behind the announcement sits the underlying question regarding how the deal came to be: why would Coinbase and Circle agree to revenue-sharing terms that historically favored stablecoin issuers?
The main factor to consider here is that Hyperliquid negotiated from a position of unusual leverage.
Before AQAv2, Hyperliquid already held between roughly $4.7 billion and $5.5 billion in USDC deposits, depending on the measurement period. Those balances generated reserve yield for Circle and Coinbase without meaningful economic participation flowing back to the protocol itself. Estimates suggest the float represented roughly $150 million to $200 million in annualized reserve yield revenue. Through USDH, Hyperliquid demonstrated a willingness to build a protocol-aligned alternative, forcing incumbent issuers to either participate economically or risk losing relevance inside one of crypto’s fastest-growing trading ecosystems.
So, it's hard to view the sunsetting of USDH as a failure. Ultimately, its value was in becoming credible enough to create competitive pressure to make a deal like this happen. While other blockchains have had to pay Circle for USDC to become their chain's stablecoin, Hyperliquid got paid for USDC to become its stablecoin. Couldn't ask for a better result there, and it has substantial implications for HYPE.
Under AQAv2, Coinbase is expected to share 90% of reserve yield revenue generated through its treasury deployer role with Hyperliquid. Using conservative assumptions, $4.7 billion in USDC at roughly 3.8% reserve yield implies more than $160 million annually flowing back into the protocol. Even more conservative models using short-duration Treasury yields place the figure closer to $150 million to $175 million per year. That translates to roughly $440,000 in incremental daily buy pressure for HYPE, and there's reason to believe those buybacks will be stickier than the ones we've had up to this point.
Until now, Hyperliquid revenue was primarily volume-linked, which, of course, rises and falls with volatility, speculation, and market cycles. Stablecoin deposits behave very differently; deposits tend to be stickier than trading activity, meaning a larger share of protocol buybacks could become increasingly resilient during weaker market environments.
Data from recent drawdowns, for example, show monthly trading volume on Hyperliquid falling roughly 55% from peak levels, while stablecoin deposits declined only around 15%.
"Stablecoin yield is the largest revenue source in the industry next to trading fees and Hyperliquid is now the first blockchain to internalize both." - Ryan Watkins
In adding stablecoin reserve yield to its business model, we see Hyperliquid now has a substantial TAM in sight.
Centralized exchanges such as Binance, OKX, and Bybit collectively hold roughly $80 billion in stablecoin balances, compared with Hyperliquid’s current roughly $5 billion base. Even modest market share gains will be meaningful for HYPE buybacks if Hyperliquid continues capturing both trading revenue and deposit yield simultaneously.
On the day of the announcement, HYPE gained roughly $2.2 billion in market capitalization (approximately 570 million tokens multiplied by a roughly $4 increase in price). Some investors argued the market effectively assigned a ~15x multiple to the newly introduced AQAv2 income stream, while Hyperliquid, as a broader business, still traded closer to ~27x revenue multiples. By comparison, CRCL trades near ~30x earnings despite now sharing a portion of what had previously been fully captured reserve income.
Hyperliquid Regulation: Risk or Validation?
Only a day after Hyperliquid announced the USDC deal, according to a Bloomberg report circulated by Zoomer, traditional financial incumbents, including CME Group and the New York Stock Exchange, have been pressing U.S. regulators to scrutinize Hyperliquid, allegedly due to concerns around market manipulation and sanctions evasion as the platform continues to grow.
HYPE sold off roughly 10% following the headline. And that's no surprise; one of Hyperliquid's core bear cases has long been centered around U.S. regulatory risk. But before you embrace that thinking, it's important to first consider that the news serves as quite the point of validation for Hyperliquid, effectively confirming that incumbent exchanges have recognized that protocol is systemically relevant enough to influence adjacent financial markets.
Missed from the news headline were several points from the article that support this notion:
- "Michael Selig, chairman of the CFTC, said at a conference in early May that Hyperliquid could 'end up influencing the spot market price or the futures market price on our registered platforms.'”
- "Several traders told Bloomberg they watch weekend trading on Hyperliquid for cues on where prices may open"
- "Don Wilson, the founder of DRW, a Chicago-based high-speed trading firm with more than 2,000 employees, said in an interview that his firm transacts on Hyperliquid through employees based abroad. He said that its growth will likely force the exchanges to change their business models."
- "While the traditional exchanges have been raising concerns about Hyperliquid, US officials are also investigating suspicious activity on their platforms. The CFTC is probing well-timed trades in oil futures on CME and ICE’s platforms,"
The main takeaway from the news should be that Hyperliquid is no longer competing solely with crypto-native venues. Through HIP-3 and its growing ambitions around non-crypto assets, it increasingly overlaps with the business models of incumbent financial exchanges. CME and NYSE, for example, collectively command valuations exceeding $250 billion and generate substantial revenue from products that resemble what Hyperliquid is increasingly attempting to bring onchain: equity derivatives, energy futures, commodities, and index-linked products.
It's also important to consider the benefits that regulation could bring Hyperliquid.
Today, institutional participants face compliance restrictions that make direct interaction with Hyperliquid difficult or impossible. Even firms interested in the platform’s liquidity and execution advantages often cannot engage due to regulatory uncertainty.
A clearer legal framework could change that. Rather than reducing demand, regulation could expand Hyperliquid’s addressable market by opening the door to institutional capital that currently sits on the sidelines. Yes, regulation would likely result in losing some speculative retail flow (that prefers non-KYC trading), but make up for it by unlocking significantly larger pools of institutional volume.
The Hyperliquid Policy Center, led by Jake Chervinsky, issued a response to the criticism shortly after the article circulated.
The organization rejected concerns around manipulation and sanctions risk, arguing that Hyperliquid’s fully transparent, onchain design makes it uniquely resistant to abusive market behavior.
“Hyperliquid offers enhanced market transparency, publishing a complete onchain record of every transaction in real time, making it a uniquely hostile environment for insider trading or price manipulation,” the Policy Center said.
With Hyperliquid looking to continue its work in Washington, the timing of the USDC deal becomes very interesting. Coinbase, arguably crypto’s most influential political actor in Washington, just became financially aligned with Hyperliquid, changing how HYPE's regulatory risk should be viewed.
The question should now shift from “Will regulators target Hyperliquid?” (of course they would, this was inevitable) to “What happens when some of crypto’s most regulation-aware institutions are financially aligned with Hyperliquid’s success and can support their lobbying efforts?”
SpaceX Price Discovery on Hyperliquid and the Expansion of Onchain Markets
On Sunday, TradeXYZ launched a pre-IPO SpaceX market on Hyperliquid, giving traders a venue to speculate on the valuation of what could be the world's largest-ever IPO before shares officially list on a traditional exchange.
The contract, trading under the ticker SPCX-USDC, launched around 5:16 a.m. UTC with a $150 reference price, based on SpaceX’s reported 11.87 billion fully diluted shares, implying an initial valuation of roughly $1.78 trillion. That sits near the lower end of reports suggesting SpaceX is targeting a valuation between $1.75 trillion and $2 trillion ahead of a Nasdaq listing expected as early as June 12.
TradeXYZ's SPCX-USDC does not provide ownership of underlying equity or access to IPO shares. In practice, the contract functions more like a continuous derivatives market reflecting expectations around where SpaceX may ultimately price when public markets open.
Because no official market price exists yet, TradeXYZ uses an internal pricing mechanism at launch before transitioning to an oracle system that relies on a 30-minute exponentially weighted moving average (EWMA) derived from market-impact prices. The system also includes “Discovery Bounds,” designed to dampen extreme volatility while still allowing continuous repricing as new information enters the market.
The result resembles something closer to a real-time forecasting market for valuation than a synthetic stock product.
Within hours of launch, SPCX surged to roughly $216, briefly implying a valuation above $2.5 trillion, before stabilizing closer to $203. First-hour trading volume reached approximately $11.5 million, while open interest climbed above $12 million. HYPE rallied roughly 7% following the SPCX launch, outperforming Bitcoin and many major crypto assets despite a broadly weaker market.
So, why's this actually important?
Historically, price discovery for private companies approaching IPO has been fragmented, opaque, and largely inaccessible to the public. Institutional investors, private secondary markets, and closed-door negotiations often shape expectations long before broader participation becomes possible. Hyperliquid introduces a competing idea that price discovery can begin before traditional infrastructure even opens, which we've also seen play out previously with oil trading on weekends during the Iran conflict.
The bottom line is that price discovery for several of the world's most important and followed assets is happening on Hyperliquid, and increasingly (as we know from the regulatory story), Wall Street is taking note.
What Changed in the $HYPE Thesis?
Together, our stories suggest that the commonly-understood thesis for HYPE is incomplete; it's time for recalibration.
The USDC deal demonstrated Hyperliquid deepening its financial infrastructure through AQAv2, stablecoin economics, and alignment with Coinbase and Circle. Our newfound regulatory scrutiny story showed traditional incumbents publicly acknowledging Hyperliquid’s legitimacy, and SpaceX price discovery represents the other two converging, as we now have one of the most anticipated IPOs ever is now seeing continuous valuation discovery happen on Hyperliquid, using USDC as the dominant quote asset inside an ecosystem that is simultaneously becoming more institutionally aligned and more politically defended.
Overall, if the events of the past week are any indication, the investment thesis for HYPE should no longer center around whether Hyperliquid can become the dominant onchain exchange.
It's time to dream bigger. Can Hyperliquid become a foundational layer for how financial markets operate onchain? Can it be the premier venue for liquidity, price discovery, and the pricing of the world's most important assets?
Can it become The House of All Finance?
