Suddenly realized
“Circle $CRCL and companies like it—stablecoin issuers—feel a bit like someone standing in the era of internet media, yet still choosing to go all-in on old-fashioned print media.”
“No matter how chaotic it gets on-chain, it still eats its share of profit from reserve yields based on scale.”
“In a future rate-cut cycle, Circle may be in trouble.”
Add some data:
Circle’s second-quarter USDC scale and usage are growing rapidly:
➠ End-of-period circulation was $73.3 billion, up 19%; quarterly on-chain transaction volume was $148 billion, up 151%
➠ But Circle’s total revenue and reserve income were only $701 million, up 7%, below expectations
Putting it together:
USDC growth is network-scale growth, while Circle’s growth is mainly interest-income growth—there’s no strong positive correlation between the two.
Because stablecoin issuers don’t take fees from every on-chain transaction, the gas fees generated by USDC transfers mainly go to the respective chains.
So that $148 billion in transaction volume reflects an increase in USDC’s usage and settlement role, but it doesn’t directly translate into Circle’s revenue growth.
What truly determines Circle’s profit is reserve yield.
Average USDC circulation increased about 25% year over year, but reserve income grew only 5%. The core reason: the reserve yield fell by 66 basis points year over year.
Scale is growing, but unit returns are declining.
This also reinforces the point:
“No matter how chaotic it gets on-chain, it still eats its share of profit from reserve yields based on scale.”
Stablecoins are an on-chain product, but the issuer’s income statement is highly dependent on real-world interest rates.
If the economy enters a rate-cut cycle, the same scale of USDC would generate noticeably less revenue.
And currently, reserve income makes up about 95% of Circle’s total revenue—other businesses aren’t yet enough to become the second growth driver.
Circle has a massive pool of US dollar reserves, but it hasn’t built a value-capture system that’s tied to stablecoin network growth.
So it urgently needs a second growth curve.
Otherwise, a stablecoin-issuing company is like someone in the era of internet media, yet still choosing to go all-in on old-fashioned print media.
“Circle $CRCL and companies like it—stablecoin issuers—feel a bit like someone standing in the era of internet media, yet still choosing to go all-in on old-fashioned print media.”
“No matter how chaotic it gets on-chain, it still eats its share of profit from reserve yields based on scale.”
“In a future rate-cut cycle, Circle may be in trouble.”
Add some data:
Circle’s second-quarter USDC scale and usage are growing rapidly:
➠ End-of-period circulation was $73.3 billion, up 19%; quarterly on-chain transaction volume was $148 billion, up 151%
➠ But Circle’s total revenue and reserve income were only $701 million, up 7%, below expectations
Putting it together:
USDC growth is network-scale growth, while Circle’s growth is mainly interest-income growth—there’s no strong positive correlation between the two.
Because stablecoin issuers don’t take fees from every on-chain transaction, the gas fees generated by USDC transfers mainly go to the respective chains.
So that $148 billion in transaction volume reflects an increase in USDC’s usage and settlement role, but it doesn’t directly translate into Circle’s revenue growth.
What truly determines Circle’s profit is reserve yield.
Average USDC circulation increased about 25% year over year, but reserve income grew only 5%. The core reason: the reserve yield fell by 66 basis points year over year.
Scale is growing, but unit returns are declining.
This also reinforces the point:
“No matter how chaotic it gets on-chain, it still eats its share of profit from reserve yields based on scale.”
Stablecoins are an on-chain product, but the issuer’s income statement is highly dependent on real-world interest rates.
If the economy enters a rate-cut cycle, the same scale of USDC would generate noticeably less revenue.
And currently, reserve income makes up about 95% of Circle’s total revenue—other businesses aren’t yet enough to become the second growth driver.
Circle has a massive pool of US dollar reserves, but it hasn’t built a value-capture system that’s tied to stablecoin network growth.
So it urgently needs a second growth curve.
Otherwise, a stablecoin-issuing company is like someone in the era of internet media, yet still choosing to go all-in on old-fashioned print media.