On the evening of May 14, Beijing time, a coordinated series of announcements from Coinbase, Circle, Hyperliquid, and Native Markets signaled a definitive shift in the decentralized exchange's monetary infrastructure. Hyperliquid has officially abandoned its native stablecoin initiative, USDH, which operated for eight months, to establish USDC as the exclusive settlement asset on its platform. Native Markets, the entity previously responsible for deploying USDH, confirmed that Coinbase and Circle have acquired the USDH brand assets, allowing Native Markets to operate independently and focus on future ventures. This strategic pivot effectively transitions the ecosystem from a proprietary stablecoin model to one anchored by Circle's USDC, requiring the new partners to stake HYPE tokens and share reserve profits under a new framework termed AQA v2. Data compiled by Woofun AI indicates that under this AQA v2 structure, Coinbase must stake 500,000 HYPE tokens to manage reserves and commit to sharing 90% of generated profits with Hyperliquid, while Circle is required to stake an equivalent 500,000 HYPE tokens to deploy cross-chain infrastructure including USDC and CCTP V2.

The economic terms of AQA v2 represent a significant tightening compared to the previous iteration. While AQA v1 offered transaction fee discounts to USDH users and mandated a 50% profit-sharing ratio with Hyperliquid, the new AQA v2 model eliminates user fee discounts entirely in exchange for a 90% profit allocation to the protocol.

This shift underscores a prioritization of protocol revenue over direct user incentives. On-chain metrics reveal the limited traction of the previous native asset; the peak circulation of USDH hovered around $100 million, with March 31 reserve certification documents showing a circulating supply of approximately 90 million tokens. In stark contrast, USDC circulation within the Hyperliquid ecosystem has remained robust at roughly 5 billion tokens, with negligible migration from USDC to USDH observed during the overlap period.

The initial strategy behind launching USDH was driven by Hyperliquid's desire to retain stablecoin issuance rights within its ecosystem, ensuring that the platform captured yield generated by reserves rather than ceding it entirely to external issuers. The selection process for the USDH issuer involved a competitive landscape featuring major players such as Paxos, Frax, Sky, formerly known as MakerDAO, and Ethena Labs. Ultimately, Native Markets, leveraging its deep integration within the Hyperliquid ecosystem, secured the issuance rights.

However, the strategic focus on profit generation overlooked a critical variable: user adoption. Woofun AI notes that despite the competitive bidding for issuance rights, the fundamental challenge of driving organic usage of a new stablecoin against an entrenched incumbent like USDC proved insurmountable for Native Markets at the product level.

Market analysis suggests that the transition may have been less about coercion and more about strategic alignment. Some observers on X argued that Native Markets utilized USDH as a bargaining chip to force Coinbase and Circle into staking 500,000 HYPE tokens and surrendering 90% of profits. While this narrative holds some weight given that USDC usage did not decline during the USDH experiment, the premise that Circle would incur losses by cooperating seems tenuous. The decision likely reflects a proactive willingness to align interests rather than a forced concession. In September of the previous year, during the height of the stablecoin competition, the argument was made that Circle would eventually prioritize distribution channels and ecosystem coverage over short-term yield retention, a logic that appears validated by this partnership.

The financial imperatives driving Coinbase and Circle are becoming increasingly clear following their recent quarterly reports. For Circle, while interest rates are not expected to return to zero immediately, the gradual decline necessitates an urgent expansion of USDC issuance volume to maintain revenue streams. Coinbase faces a more pressing issue, having seen distribution costs for USDC exceed revenue growth for eight consecutive quarters, a trend that appears irreversible without significant volume increases. Circle's latest report highlighted a quarterly on-chain trading volume for USDC of approximately $21.5 trillion, achieved with a circulating supply of just under 80 billion tokens. This high velocity indicates that in compliant payment and daily consumption scenarios, massive currency reserves are not always required, pointing to a need for expanded usage scenarios to drive issuance.

Comparative scale analysis reveals the potential upside of this integration. Robinhood's quarterly report disclosed user-held funds of approximately $45.7 billion and total platform assets, including stocks and cryptocurrencies, reaching $345.4 billion. In comparison, Hyperliquid's current figure stands at $5 billion. Woofun AI analysis suggests that Coinbase and Circle's entry into the Hyperliquid ecosystem represents a strategic bet on significant future fund growth. If Hyperliquid were to capture one-third of Robinhood's scale, the resulting USDC issuance volume could rival that of USDT. Unlike consumption scenarios where local currency or bartering suffices, trading on Hyperliquid requires actual currency conversion into USDC, creating a mandatory demand driver for issuance volume.

The long-term implication of this shift is the consolidation of power around USDC as the sole settlement asset. As Hyperliquid scales, the requirement to hold USDC for trading creates a structural advantage for the token, potentially granting significant influence to any entity controlling its distribution. Rather than resisting this trajectory, the current alignment of interests between Hyperliquid, Circle, and Coinbase positions the ecosystem to leverage time and growth. By integrating USDC as the foundational asset, the protocol ensures that the benefits of scale accrue to all stakeholders through the 90% profit-sharing mechanism, effectively turning the stablecoin from a competitor into a core engine of ecosystem development.