JPMorgan warns Hyperliquid-Circle deal threatens USDC revenue model

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JPMorgan has flagged concerns over a new deal between Hyperliquid, Circle, and Coinbase, warning it could undermine the economics of the USDC stablecoin. The bank describes the arrangement as a 'prisoner's dilemma,' suggesting the partnership creates competitive pressures that squeeze earnings tied to the dollar-pegged token. USDC, issued by Circle, is one of the largest stablecoins in the crypto market and relies on interest income from reserve assets for revenue. The involvement of Hyperliquid, a decentralized exchange that has seen rapid growth, adds a new layer of competition to the stablecoin landscape. JPMorgan's analysis suggests the deal could have lasting implications for how stablecoin issuers generate and sustain profits.

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