Data & Insights: Stablecoins Stagnate; Tokenization Wars

Circular Hype Cycle

• HIP-3 aggregate open interest (OI) reached an all-time high of $2.66 billion last Thursday, May 14, as it continues to grow by over 800% YTD.
  • At nearly 29% of total Hyperliquid OI, it is approaching a third of the venue's exposure book, with the OI inside HIP-3 even more concentrated from trade.xyz’s 95% monopoly.
  • On the other hand, Hyperliquid had two major catalysts in the last week that sparked massive attention on the platform: trade.xyz’s launch of its Pre-IPO Perpetual (IPOP) product and Hyperliquid’s deal with Coinbase on USDC.
• First, trade.xyz’s IPOP, a perp contract on a private company's expected listing price prior to its IPO.
  • On May 1st, xyz:CBRS, a cash-settled perp on Cerebras Systems, launched as the inaugural IPOP market, two weeks before Cerebras’ actual IPO.
  • IPOP solves a problem in pre-IPO grey markets of continuous, on-chain price discovery without share allocations, escrow, or counterparty risk on the equity itself.
  • The xyz:CBRS contract on Hyperliquid priced the IPO fairly accurately: trading above $280 for most of the week leading into the May 14 IPO, briefly tagging the $320s and converging near $300 by IPO eve.
  • Sell-side syndicate desks, by contrast, were marking the IPO in the $180s through Tuesday evening, raised to $185 at pricing on Wednesday night, and watched CBRS open at $350.
  • This meant Hyperliquid’s IPOP product was the most accurate price discovery mechanism for the underlying CBRS equity.
• On the same day as the CBRS IPO, Hyperliquid announced USDC as its “Aligned Quote Asset”, also known as the base settlement asset, across the platform’s markets.
  • Coinbase was named USDC treasury deployer, while Circle takes over technical deployment for USDC minting, redemption, and cross-chain transfers, and committed to stake an additional 500,000 HYPE toward a validator position.
  • USDH, the native Hyperliquid stablecoin issued under the previous auction process, will be phased out.
  • With this move, Coinbase is now operationally aligned with Hyperliquid and has a commercial incentive to route flow toward the chain.
  • Meanwhile, Circle's HYPE validator stake gives a major TradFi-aligned stablecoin issuer direct exposure to HYPE, adding further TradFi validation for the token.
• The open question, and the one that matters most for HYPE long-term, is whether any portion of the USDC float on Hyperliquid eventually flows to HYPE token buybacks.
  • With USDC float on Hyperliquid bound to grow and the chain's revenue trajectory tied to HIP-3 throughput, a deal structure where Circle or Coinbase shares back a portion of USDC reserve yield, validator rewards, or trading-fee revenue to the assistance fund would create, in theory, a direct USDC-to-HYPE buyback channel.
  • The HYPE token itself priced the Cerebras IPOP attention catalyst and the Coinbase deal accordingly, as it rose ~15% that day.

Stablecoin Stagnation

• Total stablecoin supply has just surpassed the $300 billion mark, with Tether’s USDT adding over $5 billion in the last month.
  • Yet despite Tether’s growth, the supply of USDC, USDe, and PYUSD together declined by roughly $4.2 billion over the same period.
  • All things considered, a net category growth of $0.89 billion, the equivalent of a 0.3% growth of the total supply over the past month, could be considered a stall, with overall supply not meaningfully expanding even as Tether kept printing.
  • Every marginal stablecoin dollar entering the system is a USDT dollar replacing a redeemed USDC, USDe, or PYUSD dollar.
• USDe's collapse is also a structural story worth noting.
  • Down 28% in the last month and almost 34% YTD, Ethena's synthetic dollar has experienced sustained outflows, notably since October 2025.
  • The mechanism, where USDe's yield depends on positive perpetual funding, has deflated with crypto perp funding compressed after the October 10th deleveraging event.
  • USDe’s yield simply cannot compete with overcollateralized alternatives, with the supply of Sky's USDS (+48.9% YTD) and World Liberty Financial's USD1 (+33.7% YTD) absorbing the bulk of the rotation.
  • PYUSD’s supply has also declined by 13% in the last month, as their institutional distribution thesis has not been producing supply growth
• As aggregate stablecoin supply has stalled with only Tether’s USDT growing, the bank-issued and GENIUS Act-compliant stablecoin entrants have had a harder start than many expected.
  • If these new stablecoin issuers want to displace USDT’s market share directly, they would have to utilize either higher yields, better distribution channels, or have regulatory wedges that USDT cannot match, though none of the current second-tier stables have shown those capabilities yet.

Quietly staking up

• The percentage of ETH staked has climbed to approximately 31% of total supply, up from 29% at the start of the year, a steady accumulation that has continued largely independent of price. 
  • ETH is down roughly 26% year-to-date, a notable divergence from the growing body of onchain fundamentals building around the network, including its dominant position in the RWA market. The gap between network utility and price performance raises a question of whether the market is discounting a buildout that is still in early innings.
• The continued rise in staked ETH suggests long-term holders are maintaining conviction despite price weakness and onchain risk, gradually reducing the liquid circulating supply. A contracting float against any meaningful demand recovery has historically been a constructive setup for price.
  • Liquid staking protocols such as Lido have meaningfully lowered the barrier to participation, allowing holders to stake without sacrificing liquidity. This has broadened the staking base beyond technically sophisticated validators to a wider retail and institutional audience.
• Institutional dynamics are also worth monitoring. As ETH ETF products mature and tokenization activity on Ethereum scales, institutional demand for staked ETH exposure could introduce a new layer of structural inflows into the staking ecosystem.
• The broader narrative around Ethereum, anchored in RWA settlement, DeFi infrastructure, and Layer 2 activity, continues to position the network as core plumbing for onchain finance. Whether that translates into price appreciation may depend on the pace at which institutional capital moves from narrative to active deployment.

Race to Tokenize

• The total RWA market cap has surpassed $65 billion, up roughly 44% from $45 billion at the start of the year, as traditional asset managers continue bringing tokenized assets onchain at an accelerating pace. 
  • The growth has sharpened competition among blockchains, each investing heavily in business development to attract institutional issuers. The incentive is structural as RWA liquidity is among the stickiest in crypto, with asset managers facing meaningful switching costs once tokenization infrastructure is established on a given chain.
• Ethereum holds approximately 33% of the RWA market cap, maintaining its position as the default venue for institutional tokenization, supported by deep liquidity, mature smart contract tooling, and broad familiarity among traditional finance firms.
  • Provenance Blockchain commands roughly 27% market share, reflecting its early positioning as a purpose-built financial services chain, particularly with Figure Lending anchoring its RWA suite.
  • BNB Chain, XRP Ledger, and Solana each account for approximately 6%, with all three actively building institutional-grade infrastructure and issuer pipelines to compete for share.
• The distributed market structure suggests the RWA landscape has not yet consolidated around a clear winner, leaving meaningful room for share shifts as chains differentiate on compliance tooling, settlement finality, and cost structure.
• Given the stickiness of RWA flows, early institutional wins are likely to compound over time. The current BD race may prove to be a structurally significant phase for long-term chain positioning, particularly as the asset class continues to scale toward broader tradfi adoption.

Bitmine’s ETH Hoard

• The percentage of ETH supply held by public companies has risen sharply over the past year, converging with Bitcoin's figure at roughly 5.66% each.
  • In absolute terms, ETH added approximately 5.64 percentage points of its supply into public company hands, more than 2.8x Bitcoin's gain of 2.00 percentage points over the same period. 
• The dominant driver of this accumulation is Bitmine Immersion Technologies (BMNR), chaired by Tom Lee of Fundstrat, which holds approximately 5.18 million ETH as of May 2026, representing roughly 4.31% of total ETH supply on its own.
• With total public company ETH holdings standing at approximately 7 million tokens, BMNR accounts for roughly three-quarters of the entire figure. This introduces a meaningful single-actor risk, whereby the supply dynamics underpinning this metric largely depend on the continued conviction and capital access of a single entity.
  • The accumulation has not translated into price support. ETH is down approximately 26% year-to-date, suggesting the market has not yet reflected the tightening of available supply from institutional treasury buying.
• That disconnect may prove consequential over time. Sustained absorption by long-term treasury holders, layered on top of growing staking commitments, could meaningfully compress the liquid float. Whether price reflects this supply dynamic will likely depend on demand-side catalysts materializing alongside it.