Hyperliquid validators approved the AQAv2 (Aligned Quote Asset v2) framework with 69.08% support. It extends the "aligned" status to stablecoins used on Hyperliquid that are not exclusive to the platform, starting with $USDC, and directs approximately 90% of the reserve yield generated by these assets back to the protocol after cost adjustments.
Given that Hyperliquid currently holds approximately $5 to $5.5 billion in $USDC, this yield distribution scheme is expected to generate $135 to $160 million annually in new funds for buybacks, in addition to the roughly $771 million already flowing in annually from fee-based buybacks.
Funds move through the system in 30-day cycles, with the first payment to the buyback fund scheduled for October 3rd.
The Roles of Circle and Coinbase
This update builds upon an agreement made by Circle and Coinbase with Hyperliquid back in May, which effectively phased out Hyperliquid's native stablecoin, USDH, in favor of $USDC as the exchange's primary reserve asset. Under this agreement, Coinbase became the official custodian for the $USDC treasury on Hyperliquid, while Circle is responsible for technical implementation and cross-chain infrastructure, including its Cross-Chain Transfer Protocol.
Circle has also committed to staking 500,000 $HYPE tokens in preparation for becoming a network validator, directly linking its own incentives to the performance of $HYPE, not just the share of $USDC on the platform.
A Buyback Mechanism Already Running at Full Throttle
AQAv2 complements a buyback program that is already quite aggressive. In detail, the Hyperliquid Assistance Fund, which channels most trading fees into buying $HYPE tokens on the open market, has acquired over 45 million $HYPE tokens for approximately $1.1 billion since its inception, at an average price of about $24.90 each.
More recently, it added another 26,000 $HYPE tokens worth about $1.5 million at a price of around $60 per token. Furthermore, Hyperliquid officially approved a $30 million buyback authorization to legally cement this program. Combined, the fee-based token buybacks and the new revenue stream from $USDC point to an annual buyback volume exceeding $900 million, which analysts estimate is roughly four to five times the buyback intensity relative to market capitalization observed in Ethereum or BNB Chain.
The obvious risk is that AQAv2 payouts are tied to interest rates: if $USDC reserve yields decline, so will the funds directed to buybacks, even though Hyperliquid's fee-based buybacks will continue regardless of rates. There is also a structural question analysts have noted since the Circle/Coinbase deal announcement in May: will redirecting more $USDC volume toward $HYPE buybacks squeeze Circle and Coinbase's own margins on this reserve business, even if it benefits the Hyperliquid token's growth.
The first real test will come on October 3rd when the first AQAv2 payment is made and the market can see for the first time if the mechanism works as advertised.
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