More USDC doesn't automatically mean proportionally more reserve income for Circle.
CRCLB is one of the bStocks that caught my attention because the obvious label is simple:
Circle = USDC.
So when USDC circulation grows, my first instinct is to expect Circle's reserve income to grow at roughly the same pace.
But the latest numbers made that assumption look too simple.
In Q2, average USDC in circulation reached about $76.5B, up 25% YoY.
Yet reserve income was about $668M, up only 5% YoY.
Why the gap?
Because reserve income depends on both the amount of USDC in circulation and the return earned on the reserves backing it.
And while circulation was growing, the reserve return rate fell to about 3.5%, down 66 bps YoY.
USDC circulation was growing. The return earned on the reserves was moving the other way.
That changed how I look at CRCLB.
I don't want to stop at:
“USDC adoption is growing.”
I want to ask:
“What is that growth actually doing to Circle's economics?”
My quick check would be:
1. Average USDC circulation
2. Reserve return rate
3. Reserve income
Because:
More USDC ≠ automatically more reserve income.
#bstockscis @BinanceCIS
CRCLB is one of the bStocks that caught my attention because the obvious label is simple:
Circle = USDC.
So when USDC circulation grows, my first instinct is to expect Circle's reserve income to grow at roughly the same pace.
But the latest numbers made that assumption look too simple.
In Q2, average USDC in circulation reached about $76.5B, up 25% YoY.
Yet reserve income was about $668M, up only 5% YoY.
Why the gap?
Because reserve income depends on both the amount of USDC in circulation and the return earned on the reserves backing it.
And while circulation was growing, the reserve return rate fell to about 3.5%, down 66 bps YoY.
USDC circulation was growing. The return earned on the reserves was moving the other way.
That changed how I look at CRCLB.
I don't want to stop at:
“USDC adoption is growing.”
I want to ask:
“What is that growth actually doing to Circle's economics?”
My quick check would be:
1. Average USDC circulation
2. Reserve return rate
3. Reserve income
Because:
More USDC ≠ automatically more reserve income.
#bstockscis @BinanceCIS
