Hyperliquid’s push for USDH has got other chains like Solana thinking of making a similar move, instead of helping ‘fund’ Coinbase’s Base by relying on USDC. Will Circle handle the pressure?
Solana [SOL] leaders now want a new stablecoin aligned to its ecosystem, thanks to the eye-opening bidding wars for a Hyperliquid [HYPE]-aligned USDH issuer.
For those unfamiliar, Hyperliquid plans to replace USDC with its native stablecoin, USDH.
The platform plans to allocate over 90% of the yield generated from USDH reserves toward value accrual, primarily through HYPE token buybacks and other ecosystem-enhancing mechanisms
And top issuers are fighting for this deal. So, why not do the same for Solana? Well, that’s the proposal Mert Mumtaz, founder of Solana-based Helius Labs, floated.
“Warming up to the idea that Solana should enshrine a stablecoin. 50% burn of the yield goes back to burning SOL. Solana is currently funding its biggest competitor on a commodity!!!”
Mumtaz noted that SOL-aligned digital asset treasuries (DATs) could emerge as competitors to existing stablecoin issuers, capturing yield that would otherwise flow to Coinbase’s Base chain.
It’s important to highlight that Coinbase receives roughly 50% of Circle’s USDC revenue, including interest earned.
Currently, USDC dominates Solana’s stablecoin market, accounting for 70% of supply with $8.5 billion in circulation, according to DeFiLlama.
At 4% interest rate, that’s over $340 million yield on USDC circulation on an annualized basis. But all the yield is split between Coinbase and Circle, and not Solana.
Interestingly, Solana Co-Founder, Anatoly Yakovenko, and VC Multicoin Capital supported Mumtaz’s idea.
In fact, Tushar Jain, founder of Multicoin Capital, said both Solana and Ethereum [ETH] should go the Hyperliquid way.
“Why should Circle keep all of the interest revenue from USDC on Solana? Fwiw, Ethereum should do this too. It will massively drive up Ethereum’s REV and drive buying pressure on ETH.”
However, critics pointed out that the move could escalate friction with L1s, DATs, and force apps to opt for their own chains to avoid sharing the yield.
In response, Yakovenko quipped that the market can figure that out.
Notably, Hyperliquid is the third-largest market for USDC after Solana and Ethereum. Hence, if USDC loses the market share in these networks, it could impact even its stock, CRCL.
In fact, the CRCL stock price has dropped 16% since Hyperliquid fronted the USDH stablecoin. It remains to be seen whether Solana will officially take up the recent proposal and affect CRCL further.
