JPMorgan has lowered its earnings forecasts for Circle and Coinbase, warning that a new revenue sharing agreement with Hyperliquid is weakening the economics behind USDC.
The bank said the arrangement creates a “prisoner’s dilemma” that encourages Circle and Coinbase to compete for USDC distribution at the expense of their own revenue.
JPMorgan described the deal as an immediate earnings headwind for both companies and a larger long term threat to Circle.
Hyperliquid holds roughly $6 billion in USDC, representing about 8% of the stablecoin’s circulating supply, according to estimates from JPMorgan.
Under the revised agreement, Coinbase classifies USDC held on Hyperliquid as an on platform balance. Coinbase collects the income generated by the reserves backing those tokens and passes 90% of it to Hyperliquid. The company previously shared nearly all of that income evenly with Circle, JPMorgan said.
