The Custody Behind Hyperliquid's USDC Yield

According to HyperliquidNews, Hyperliquid validators are considering redirecting 90% of the yield earned on USDC toward buying back and burning HYPE.

What exactly is this yield?

Since mid-May, Coinbase has been the official treasury deployer for the Hyperliquid platform. This means that when Hyperliquid users fund their accounts by sending USDC into the HyperCore blockchain via the platform's official bridge, those tokens come under Coinbase's control - and Coinbase deploys them in a way that generates yield.

So yes, the yield is real. But let's not overlook the flip side:

• When you deposit USDC on Coinbase, those tokens come under Coinbase's control.
• When you deposit USDC on Hyperliquid, those tokens are also transferred to Coinbase's custody

The difference is that in the Hyperliquid case, much of the yield generated from those deposits could potentially end up in the pockets of HYPE sellers - assuming the validators vote for it. And frankly, I have no doubt they will, because Hyperliquid's validators are also large HYPE holders.

Governance structures may vary. But the custodial model is the same everywhere.

If you want to stay in control of your own funds, don't hand them over to any exchange. And whenever you need to swap one crypto asset for another, just use rabbit.io.