Circle to Develop Native USDC on Hyperliquid’s HyperEVM
In a move set to shape the future of stablecoins, Circle, the largest force in the stablecoin sphere, has announced plans to introduce its native USDC on Hyperliquid’s HyperEVM blockchain. This significant change is set to allow for the direct minting and redemption of USDC. This modification means that the use of wrapped tokens which were previously transferred through the existing Arbitrum bridge will be reduced.
Changes to the Current Setup
Hyperliquid’s current configuration enables the movement of USDC from Arbitrum through a multi-signature bridge. This bridge is managed by four validators, with a quorum of two-thirds required for authorizations. In essence, three signers can authorize withdrawals. The community has raised concerns about the bridge’s structure and the accompanying operational risks, particularly as the keys are believed to be held in secure physical custody.
Circle’s move towards native USDC on Hyperliquid, however, will allow the company to issue the token directly on the platform, eliminating the requirement for bridging in the process. As of now, Circle has not clarified whether the Arbitrum bridge will continue to operate.
Tackling the Speculation
A Company spokesperson from Circle did not provide specific details about whether native minting would eradicate the requirement for the Arbitrum bridge. A quest for comments from Hyperliquid has yet to yield a response.
A Flashpoint in the Future of Stablecoin
A senior research analyst at Messari, Dylan Bane, shared with The Defiant that Circle’s decision to mint USDC directly on Hyperliquid sends a clear message. It illustrates that Circle perceives the platform as a credible and growing hub for trading, backed by the promising potential of the HyperEVM.
Bane elaborated that as Hyperliquid begins to establish a larger market share across spot and perpetual markets, Circle seems to be taking an early position in what it stands as a rising source of stablecoin velocity. In doing so, Circle’s institutional credibility in both the crypto and traditional finance spheres further establishes Hyperliquid as a respected chain, thereby increasing the chances of institutional investments in the chain’s token.
The Potential Impact on Arbitrum
However, according to Bane, the minting of native USDC on Hyperliquid can have adverse effects on Arbitrum. He suggested that with almost 68% of Arbitrum’s USDC total value locked (TVL) currently deployed on Hyperliquid, the removal of bridging requirements could cause a significant amount of liquidity to leave the chain.
Bane also added that as the HyperEVM matures, Hyperliquid is likely to become less dependent on Arbitrum. The perceived outcome of Circle’s move to create a native USDC on Hyperliquid appears to have negatively impacted Arbitrum’s strategic position, with its token value decreasing by over 11% since Circle made the announcement.
Further Developments
As of this writing, ARB, Arbitrum’s token, is trading at $0.3867, which is an 8.8% decrease over the past week according to CoinGecko. Analysts have suggested that the native issuance could result in Hyperliquid no longer needing to store the $5 billion worth of bridged USDC, which relieved some fears about the network.
