Author: Jae, PANews

On May 14th, the major news broke that Hyperliquid's native stablecoin USDH had been acquired by Coinbase. Coinbase has replaced it as the official treasury deployer of USDC on Hyperliquid, while Circle's USDC has become Hyperliquid's Aligned Quote Asset (AQA).

On the same day, Hyperliquid's first pre-IPO perpetual contract, CBRS, became a hot topic due to its pioneering efficient price discovery, resulting in a surge in trading volume.

Following multiple positive news, the HYPE token quickly broke through the $40 mark, rising more than 20% in 24 hours, attracting many whales to build positions.

USDH officially gives way to USDC, with Hyperliquid capturing 90% of reserve profits.

As the undisputed leader in the Perp DEX sector, Hyperliquid, with its massive user base and trading volume, has long been a battleground for giants to integrate or adopt its technology.

Hyperliquid's decision to relinquish control of its USDH business line and shift towards Coinbase and USDC must have deep strategic considerations behind it.

Through this collaboration with Coinbase and Circle, the Hyperliquid ecosystem will not only gain access to mature deployment technologies but also save on costs related to stablecoin issuance, compliance, and reserve management.

USDH was initially launched as Hyperliquid's native stablecoin, aiming to reduce reliance on external USDC, capture reserve yields, and provide users with a better on-chain trading experience. However, since its launch in September 2025, despite some platform support, USDC has firmly maintained its dominant position in the ecosystem, while USDH's liquidity growth has been slow and has failed to achieve significant scale. This has directly led to liquidity fragmentation and a fragmented user experience.

To address this, Native Markets, the issuer of USDH, has partnered with Coinbase. Under the agreement, Coinbase will acquire the USDH brand assets, and USDH will gradually be phased out. During the transition period, users can exchange USDH for USDC with zero transaction fees or redeem it directly for fiat currency.

More importantly, there are underlying interests behind this collaboration. Hyperliquid's official AQA documentation stipulates that stablecoin deployers must directly return 90% of their reserve revenue to the protocol for HYPE token buybacks, ecosystem incentives, and other purposes.

As of May 15, the circulating supply of USDC on Hyperliquid exceeded $5 billion. Based on a federal funds rate of 3.6%, the protocol's annualized income could reach $180 million, equivalent to a continuous net inflow of approximately $490,000 per day.

Furthermore, following its initial purchase of HYPE tokens last September, Circle will stake another 500,000 HYPE tokens, further aligning the interests of both parties. Of course, for Circle, this collaboration essentially involves sacrificing some marginal profits in exchange for a greater network effect and a long-term competitive advantage.

CBRS on-chain pre-pricing drives up HIP-3 transaction volume.

On the same day, Hyperliquid also received further attention due to its pre-IPO perpetual contract with AI upstart CBRS (chip company Cerebras Systems). This contract, launched on the TradeXYZ platform, completed a price discovery round prior to the company's official IPO.

Cerebras Systems was priced at approximately $185, and reached a high of nearly $386 on its first day of trading. Prior to its listing, the perpetual contract price had already been pushed up to the $270-$350 range on-chain, reflecting the potential for a premium after listing to some extent.

This price performance has made the contract a popular trading instrument on the platform, and has also fueled further discussion about the battle for pricing power in Hyperliquid's IPO. According to ASXN data, CBRS saw over $280 million in trading volume in the past 24 hours, ranking as the platform's ninth most traded asset.

In fact, with the dramatic fluctuations in the global macroeconomic situation, demand for RWA's on-chain perpetual contracts for oil, gold, and the S&P 500 index has surged.

The HIP-3 market capitalized on this trading surge. During the escalation of the Middle East conflict, the 24-hour trading volume of crude oil perpetual contracts on the platform once exceeded $1 billion. According to Artemis data, Hyperliquid HIP-3 open interest surpassed $2.5 billion, continuing to set new records. Since the beginning of this year, Hyperliquid HIP-3 open interest has increased by over $2 billion.

HypeStats data shows that RWA perpetual contracts continue to contribute about 30% of the platform's open interest.

On May 2, Hyperliquid also officially launched the HIP-4 (Outcome Trading) market, which is Hyperliquid's attempt to catch up with pioneers such as Polymarket and Kalshi in the prediction market field.

Unlike the isolated asset pools of traditional prediction markets, HIP-4 has a dual competitive barrier:

Unified margin: In theory, traders can use the same margin account to hold positions in both perpetual contracts and event contracts, which will significantly improve capital efficiency.
On-chain CLOB matching: Unlike Polymarket's partially off-chain matching logic, HIP-4's order book is completely on-chain to ensure that every transaction of an event contract is transparent and traceable.

According to Predictefy, HIP-4's BTC price event recorded a trading volume of $6.15 million on its first day of operation. While this far surpasses similar markets on competitors like Polymarket and Kalshi, it only accounts for approximately 0.7% of the overall prediction market share.

Furthermore, deploying the HIP-4 market requires staking 1 million HYPE tokens. Perhaps due to funding costs, the HIP-4 market currently focuses primarily on BTC price event contracts and has not yet encompassed traditional prediction market themes such as politics, sports, and entertainment, resulting in a relative scarcity of trading instruments.

Bullish sentiment and ETF catalysts have increased attention on hybrid equity funds.

Boosted by positive news, market confidence in HYPE's fundamentals has significantly increased.

On the one hand, with the surge in trading volume and the sharing of reserve revenue, Hyperliquid's revenue has more room for growth, providing more support for HYPE's valuation.

As is well known, Hyperliquid's performance is directly reflected in the value capture of the HYPE token, and the protocol adopts a fairly aggressive revenue return policy.

Over 97% of the platform's transaction fee revenue is deposited into the Assistance Fund. The fund will repurchase and burn HYPE tokens daily on the open market.

Cumulative repurchase scale: As of May 15, the Assistance Fund has cumulatively repurchased and holds more than 44 million HYPE tokens, with a total value of more than US$2 billion, and an average repurchase price of approximately US$45.
Annualized revenue: Based on the current fee rate, Hyperliquid's annualized revenue has exceeded 600 million, making it the most profitable crypto protocol in the market outside of stablecoin issuers.
Deflationary pressures: Buyback funds from organic trading activity will also provide strong bottom support for the HYPE token, translating into direct buying pressure.

It is worth noting that although the HYPE token has a robust burning mechanism, its future unlocking plan remains a Damocles' sword hanging over its price.

Unallocated supply: Approximately 38.9% of the supply remains in the treasury for future emissions and community incentives, with a total FDV (fully diluted market capitalization) of up to $17.5 billion, compared to HYPE tokens' current market capitalization of less than $12 billion.
Team Lock-up: Approximately 17.6% of tokens held by core contributors will continue to be unlocked in batches. Although the previous large-scale unlocking was smoothly absorbed by the market, if the market subsequently enters a period of low volatility, it may create sustained supply pressure.

Moreover, HYPE is also accessing mainstream capital markets through ETFs.

On May 12, two Hyperliquid-related ETFs launched by crypto asset management company 21Shares were officially listed on the Nasdaq exchange. This move represents institutional recognition of the protocol and will significantly lower the barrier to entry for traditional investors to participate in the Hyperliquid ecosystem.

21Shares Hyperliquid ETF (THYP): This is a spot ETP (Exchange Traded Product) that integrates native staking rewards. The product trust will stake its HYPE tokens with professional validators such as Figment, and the resulting rewards will be distributed to investors in the form of quarterly dividends, with approximately 70% distributed to holders and 30% going to the service provider.
21Shares 2x Long HYPE ETF (TXXH): This is a leveraged ETF that uses derivatives to provide investors with double the profit or loss from the price fluctuations of the HYPE token, making it suitable for short-term trading.

Bitwise followed suit, with its staked ETF BHYP set to begin trading on the New York Stock Exchange on May 16, and Grayscale also submitted an application for GHYP. This ETF race indicates that the HYPE token is being viewed by traditional financial institutions as an asset with intrinsic yield potential.

According to 21Shars, THYP's trading volume reached $1.8 million on its first day of trading, with a net inflow of $1.2 million.

Looking at the performance of altcoin ETFs, the first XRP spot ETF saw a trading volume of $58 million on its first day of trading, while the first SOL spot ETF lagged behind, with a trading volume of approximately $57 million.

THYP still lags significantly behind them. It's fair to say that while Hyperliquid has secured its place on Wall Street, gaining widespread investor acceptance remains a long and arduous journey.

Hyperliquid is raking in transaction fees behind its nearly 40% on-chain perpetual share.

Hyperliquid's valuation is revenue-driven, with protocol revenue primarily derived from perpetual contract trading. The high leverage of derivatives trading means that its notional trading volume is typically several times, or even tens of times, that of the spot market, thus generating much higher spreads and fees with the same level of activity.

As of May 15, Hyperliquid has captured approximately 38% of the on-chain perpetual contract market.

Ethereum once dominated transaction fee revenue thanks to its strong application ecosystem. The Fusaka upgrade is considered a major technological advancement, further reducing L2 data availability costs by introducing PeerDAS.

However, fee compression also led to a "slump" in Ethereum's mainnet fees. As a large number of transactions were moved to L2, the mainnet's ability to capture gas revenue declined significantly, and its share in application layer revenue distribution shrank from 50% at the beginning of 2024 to about 25% at the end of 2025.

In the Ethereum ecosystem, the fees generated by a Perp DEX transaction are distributed among L2, sequencers, validators, and the mainnet. This fragmented profit-sharing mechanism struggles to compete with Hyperliquid's vertically integrated structure in terms of revenue generation efficiency. Applying a sovereign blockchain model ensures that every penny of the fees flows directly back into the ecosystem.

Solana maintained its trading volume and activity through the Meme coin craze, but its revenue structure heavily relied on low-priced, high-frequency speculative spot trading. When the market returned to a stable state, the upper limit of spot trading fees became its revenue ceiling.

Additionally, while Solana is equally adept at handling high-concurrency transactions, the Hyperliquid trading engine's 0.07-second finality provides a superior trading experience when dealing with high-frequency order book matching.

Overall, Ethereum and Solana are struggling with thin profit margins, while Hyperliquid is far ahead thanks to its high cash flow.

In fact, Hyperliquid's revenue surge is inseparable from its rapid product iteration. By building a series of HIP marketplaces, the protocol has extended its business reach from crypto derivatives to RWA (Real-World Assets) and prediction markets, gradually expanding into a full-asset trading platform.

In this process, Hyperliquid's pricing logic has shifted to a "revenue-defined valuation" paradigm. The protocol is eroding the fee moat of platforms like Ethereum and Solana with its substantial cash flow.

In the second half of the game, protocols that can generate continuous revenue for users are the real valuable assets.

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