Coinbase-Circle partnership faces long-term structural strain
The discussion highlighted a growing competitive tension between Coinbase and Circle that could eventually lead to a renegotiation or termination of their highly profitable USDC revenue-share agreement.
The argument
The guest noted that as Circle prepares to go public, it is expanding into infrastructure layers (like ARC and its own agent stack) that directly compete with Coinbase's Base chain. While their current yield-sharing agreement is expected to be renewed for three years in late 2024, their long-term alignment is threatened by overlapping business models.
The thesis, stress-tested
✓ What validates it
- ✓Terms of the USDC agreement renewal in August or September 2024
- ✓Launch of competing stablecoins on Coinbase's platform to diversify away from USDC
▸ Risks discussed
- ▸Coinbase's subscription revenue is highly dependent on the USDC interest-share agreement
- ▸Circle could successfully bypass Base with its own payment infrastructure
Hear it yourself
"with a no KYC, decentralized exchange that does not serve US customers. But, clearly, it's almost like Coinbase recognizes, well, okay, that, you know, this this world of on chain finance is growing quickly. The the regulations for, you know, how this is going to to shake out aren't they're not codified at least here in The US. But because it's growing so fast, Coinbase has to get some part of the pie in some fashion, and the best way that they could probably do it at this point in time is USDC. And, yeah, it's"
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