Hyperliquid Flips Stablecoin Reserve Economics

TD Cowen Lifts Strategy Target to $400 | 3F Builds Leveraged RWA Markets on Morpho

Marco Manoppo & Karon Pangestu
May 20, 2026

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Good Morning.

Hyperliquid just rewrote who keeps the yield, forcing Circle and Coinbase to share reserve income they always treated as their own, and the uncomfortable part for issuers is that the leverage was never theirs to begin with. Whoever holds the deposits sets the terms now, and the line of protocols waiting to demand the same cut is only going to get longer.

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In Today's Email:

What Matters: Hyperliquid Flips Stablecoin Reserve Economics 👀
Case Study: TD Cowen Lifts Strategy Target to $400 🔎
Governance & Features: 3F Builds Leveraged RWA Markets on Morpho 🦋

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Narratives: Issuer Margin Squeeze

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WHAT MATTERS

Hyperliquid Flips Stablecoin Reserve Economics

State of play: Hyperliquid's new deal makes USDC its official Aligned Quote Asset and routes up to 90% of reserve income to the protocol, redirecting yield that long flowed to Circle and Coinbase.

Coinbase becomes treasury deployer while Circle handles minting and redemptions, with USDH set to sunset over time.
The structure ties Hyperliquid revenue to deposits rather than trading volume, making token buybacks more resilient through downturns.
Analysts peg near-term yield-sharing revenue at $135M to $160M, with upside to $300M to $500M if balances grow.
Compass Point estimates $60M to $80M in combined annual EBITDA pulled from Circle and Coinbase.
HYPE has climbed nearly 10% over the past week, defying broader market weakness.

Why it matters: Stablecoin issuers have spent years assuming reserve yield was theirs to keep, and Hyperliquid just exposed that assumption as a negotiating position rather than a law of nature.

Our take: Distribution beats issuance, and the platforms sitting on the deposits now hold the pricing power, leaving Circle defending margins it never really owned.

For builders and investors: Watch whether Polymarket and Jupiter force the same terms, because a wave of yield-sharing demands would reprice Circle and Coinbase well before it shows up in their guidance.

CASE STUDY

TD Cowen Lifts Strategy Target to $400

TD Cowen raised its Strategy price target to $400 from $395 on a Buy rating, citing faster-than-modeled bitcoin accumulation and a $1.5B accretive repurchase of out-of-the-money convertible notes.

Preferred equity issuance drove roughly $1.95B in Q2 raises, with nearly all proceeds deployed into bitcoin.
Strategy is on track for about 100,000 BTC bought in Q2, lifting full-year BTC Yield projections to 19.8% from 18.2%.
The $1.5B note buyback at an 8% discount cuts diluted share exposure while improving credit quality.
Strategy now holds 843,738 BTC, more than 4% of the 21M supply cap, after its largest single-week purchase this year.
The target implies more than 140% upside from Monday's $166.63 close, down roughly 63% from its 52-week high.

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INSIGHTS

Stablecoin Supply Stalls as Tether Gains

State of play: Total stablecoin supply topped $300B, but net growth was just 0.3% over the past month as Tether added over $5B while USDC, USDe, and PYUSD shed a combined $4.2B.

Every marginal stablecoin dollar entering the system is now a USDT dollar replacing a redeemed rival.
USDe fell 28% in a month as compressed perp funding gutted the yield underpinning Ethena's synthetic dollar.
Overcollateralized alternatives absorbed the rotation, with Sky's USDS up 48.9% and World Liberty's USD1 up 33.7% year to date.
PYUSD supply dropped 13% over the month as its institutional distribution thesis failed to drive growth.
Bank-issued and GENIUS Act-compliant entrants have had a harder start than many expected.

FEATURES & GOVERNANCE UPDATE

3F Builds Leveraged RWA Markets on Morpho

3F is a leveraged yield marketplace built on Morpho, betting that Morpho's minimal base layer lets it ship opinionated customization rather than bootstrap an unproven lending protocol from scratch.

Morpho's stripped-down design gives 3F room to build features the base layer does not impose itself.
These include exclusive borrow in 3F-onboarded markets and custom pre-liquidation and liquidation premiums.
Fixed-rate borrow is on the roadmap, extending what 3F layers on top of Morpho.
Building on Morpho sidesteps the hard task of convincing bootstrap capital to leave protocols with proven Lindy.
The tradeoff is dependence on Morpho's primitives rather than owning the full lending stack.

Other notable feature updates:

Nest sunsets USDH liquidity pool support.
Re adds GHO borrowing incentives on Fluid.
Wintermute launches Armitage USDC vault.
Ink adopts Chainlink Scale across ecosystem.
3F launches leveraged Centrifuge CLO strategy.
Flex launches fixed-rate isolated money market.
Apyx publishes independent reserve attestation.
RAAC enables gold-backed pmUSD redemptions.
Polymarket partners with Nasdaq Private Market.
Solstice boosts Exponent market reward multipliers.

QUICK BITES

Ethereum leads $65B RWA race.
Spot bitcoin ETFs log $649M in net outflows.
TD Cowen raises Strategy price target to $400.
Tokenized equities daily volume hits all-time high of $3.57B.
South Carolina Governor signs pro-crypto, anti-CBDC bill into law.
Senator Warren criticizes OCC over Ripple, Coinbase’s trust charters.
CFTC sues Minnesota over first explicit state ban on prediction markets.
Trump orders Fed to review giving crypto firms access to master accounts.
Tether, Gnosis co-lead $4.4M seed round for mobile-friendly Sorted Wallet.
Stablecoin supply tops $300B but growth stalls as Tether gains at rivals’ expense.

NOTEWORTHY READS & MEME

Viktor’s read on VVV: Crypto AI's Revenue Story.
100y’s read on Tokenization Gone Wrong Could Fragment Stocks.
Stacy’s read on Three categories Dominating the RWA Landscape.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.