In this issue of Coin Metrics’ State of the Network, we analyze Circle’s post-IPO performance and valuation, break down who captures the economic value of USDC, and project Circle’s future revenue potential based on interest rates, USDC adoption, and competitive dynamics of the stablecoin market.
Key Takeaways
- Circle’s market cap has surged to $63B, propelled by the passage of the GENIUS Act and now exceeds the value of USDC in circulation. But at ~37x trailing revenue and ~401x net income, its valuation appears increasingly detached from underlying fundamentals.
- Coinbase earned ~56% of USDC reserve revenue in 2024, making it a major distribution cost for Circle. However, the partnership remains central to scaling USDC through Coinbase’s products and ecosystem.
- Based on projections from on-chain data and public filings, Circle’s USDC reserve income could grow from $1.6B in 2024 to over $9B by 2029. But under current revenue-sharing terms, Circle may retain less than half of that amount, highlighting the importance of diversifying beyond reserve-based revenue.
- With interest rates projected to decline, Circle’s long-term revenue potential hinges on expanding USDC supply, and growing market share amid intensifying competition from new regulated issuers.
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