“Two Peaches, Three Warriors”: Hyperliquid’s Operational Strategy

Author: Zuo Ye Web3

On May 14, Native Markets announced it had “sold” $USDH to the Circle-Coinbase (CC) consortium; after just three months of brief operation ending in August, NM walked away with the cash.

Meanwhile, the CC consortium not only acquired $USDH but also committed to staking $HYPE and sharing revenue with the Hyperliquid ecosystem.

The Hyperliquid team executed two textbook “empty-handed” maneuvers. First, it granted $USDH official legitimacy—while NM handled issuance, reserves, and compliance.

Second, it anchored liquidity via AQA (Approved Quote Asset), prompting the CC consortium—backed by $5 billion in existing business—to step in and absorb the asset, making Hyperliquid the sole DEX revenue-sharing channel for $USDC.

A Liquidity Double-Blind Game

Returning to the $USDH auction’s origin: Why did Native Markets win? In hindsight, this outcome raises serious questions.

The answer lies solely in Hyperliquid’s strategic logic—NM was likely nothing more than a pawn.

It’s highly unusual for a perpetual DEX’s quote asset to launch simultaneously with—and become deeply embedded within—the entire ecosystem’s foundational layer.

Especially puzzling is Hyperliquid’s sudden decision to run a $USDH auction while $USDC was already arbitrage-bridged across chains and native HyperEVM deployment was underway. If the sole purpose was to enable $HYPE staking and revenue sharing, direct negotiations with Circle would have sufficed.

In retrospect—and especially as of the July 2025 milestone—Circle’s agreement to share revenue with Bybit may mark the true historical starting point.

Prior to this, Circle had only entered similar revenue-sharing agreements with Coinbase and Binance—particularly Coinbase, which previously captured over half of $USDC’s issuance profits.

Recall that Coinbase’s liquidity pales in comparison to Binance’s; Circle’s move effectively signed an “unequal treaty.” Indeed, in 2023, the CC consortium did formalize such an agreement:

1. Circle retained full ownership of $USDC, while Coinbase held only partial equity;
2. Coinbase received all interest generated from $USDC on its own platform, plus 50% of interest from all remaining $USDC;
3. The agreement spanned three years and automatically renewed unless either party proposed amendments.

Understanding these terms reveals Coinbase’s outsized influence over Circle. In the early days (2019–2020), USDC survived under USDT’s shadow only thanks to Coinbase—its price being “partial surrender of sovereignty.”

In 2023, as Circle prepared for its IPO, it had no choice but to adopt this strategy to part ways amicably with Coinbase—finally ending Coinbase’s exclusivity period and enabling USDC’s true expansion into onchain and payments markets.

Caption: USDC Revenue-Sharing Partners

Source: @zuoyeweb3

At the time, USDT dominated most onchain transfers and exchange quote-asset market share. To penetrate mature markets, USDC paid dearly—for example, a one-time $60 million partnership fee to Binance in 2024.

Coinbase couldn’t collect fees for free. With insufficient liquidity of its own—and fearing USDC might be lured away by Binance—it facilitated the USDC-Bybit revenue-sharing agreement.

The second-largest offshore exchange and the largest compliant exchange continue their familiar “horizontal alliance” to counter the dominant global exchange—a modern retelling of the “Six States Alliance” against Qin.

One side note: Paxos’s USDG also partnered with Kraken and OKX; Ethena’s USDe likewise signed cooperation agreements with CEX VCs.

Given this context, Hyperliquid—renowned for proactive market-making—announced the $USDH ticker auction in September 2025, skillfully leveraging market pressure to force responses from Circle and Coinbase.

Even after NM won the bid, it received zero liquidity support. On HyperCore—the core quote-asset layer—USDC remains overwhelmingly dominant.

But that’s irrelevant: USDH’s mere existence exerts psychological pressure on the CC consortium—and this pressure intensifies daily alongside HIP-3’s rollout.

Hyperliquid treats liquidity as a weapon: defensively, it attracts NM; offensively, it leverages NM to draw in the CC consortium.

Legitimacy, Peak Tier

After NM secured $USDH, the deed was done—and Hyperliquid exchanged mere “legitimacy” for $100 million in quote-asset value, while attracting external stablecoins like USDe to stake $HYPE and deploy liquidity.

This is a game of chicken: everyone knows $USDC’s role as the quote asset is vital for overall liquidity—but Hyperliquid is betting on fragmentation versus the CC consortium’s generous incentives.

Examining the CC consortium’s terms reveals remarkable transparency: beyond pledging 500,000 $HYPE each, Circle and Coinbase jointly committed to allocating over 90% of USDC interest income to the Hyperliquid ecosystem—compared to NM’s era, which offered only a 50% $HYPE buyback allocation.

This underscores Coinbase’s centrality: Circle alone lacks authority to set such steep thresholds. Yet the CC consortium bets on scale effects—especially to counter USDT’s encroachment onto-chain.

On April 16, Drift’s self-rescue plan saw Tether (USDT’s issuer) extend a $100 million credit line to restore liquidity—with the condition that Drift switch its quote asset to USDT.

That’s unsurprising: though USDT dominates CEXs and payments, it has never abandoned its ambitions for DeFi’s onchain frontier.

Beyond the tacit understanding between Hyperliquid and the CC consortium, NM’s team itself is intriguing: Why would they willingly play the role of actors in this production?

The most plausible answer: Their interests are fully aligned with $HYPE—not tightly bound to $USDH—making this an impeccably staged performance.

Caption: $USDH “Speedrun” in August

Source: @zuoyeweb3

Reviewing NM’s founders’ backgrounds and core business reveals something astonishing: They appear loosely connected to Native Markets itself—but deeply tied to various $HYPE stakeholders.

Though MC Lader serves as CEO, Max Fiege is more commonly regarded as the central figure—not least because he previously built the stablecoin protocol Liquity and maintains close ties with Hyperion (the $HYPE DAO company). Most tellingly, he joined Hyperion as Strategic Advisor in June 2025—only then launching Native Markets to bid for $USDH.

Consider co-founder Anish Agnihotri: He shares deep roots with Paradigm—the early $HYPE investor—and ranks among Paradigm’s youngest researchers, effectively representing VC interests.

Though Hyperliquid’s team abstained from voting in the $USDH auction, market makers like CMI Trading publicly endorsed NM beforehand—confirming NM’s status as an “insider” within the Hyperliquid ecosystem.

Thus, $USDH launched and concluded on schedule—even suggesting NM’s acquisition better served its interests: Circle’s revenue-sharing buybacks of $HYPE represent $150 million in annual new demand.

Driven organically by the market, the Hyperliquid ecosystem rallied behind NM to win the auction—but note: USDH’s legitimacy still flows exclusively from Hyperliquid’s official endorsement, and AQA (Approved Quote Asset) designation rests solely with Hyperliquid.

AQAv2 thus emerges—not merely signaling $USDH’s conclusion of its historical mission, but quietly sealing the fate of other QAs (Quote Assets) like $USDe, relegating them to supporting roles in this game.

USDC will become the Hyperliquid ecosystem’s sole “default quote asset”; other quote assets may persist—but without liquidity or legitimacy.

With precision and control, Hyperliquid secured revenue and staking; NM profited and exited; the CC consortium blocked USDT; only self-built quote assets were left wounded.

Conclusion

Proactive market-making remains Hyperliquid’s defining trait.

Yet executing it so masterfully—seamlessly adapting at every market inflection point, achieving maximum impact with minimal effort—is a masterclass every founder should study frame-by-frame.

Moreover, commerce is warfare: one misstep, and you risk becoming—like USDe—first a decoy, then a tool, and finally, marginal.