𝐇𝐞𝐫𝐞'𝐬 the bull case for 𝐂𝐢𝐫𝐜𝐥𝐞'𝐬 $6B 𝐈𝐏𝐎 👇 TL;DR Upside case for Circle is $30B in 3-5 years from growing total stablecoin supply to $1T, growing marketshare to 29% of stablecoin supply, distribution costs flatten. $CRCL could generate $1B of Net Income and at 30x PE ~$30B. Background Circle is the #2 stablecoin issuer in the world with USDC which sits at $62B up ~90% YoY. At $26, the high range of the IPO price, Circle is valued at $6.3B fully diluted market cap or $5.3B enterprise value. Most of the commentary on Circle has been around slowing 2024 revenue growth, decreasing gross profit from increasing distribution cost to parties like Coinbase, and falling interest rates. Today, we focus on the upside case for Circle and USDC and what could go right if stablecoins continue to proliferate and how value accruals to Circle's core business. Circle's core drivers TODAY are: 1. USDC supply growth: the amount of USDC minted and outstanding -- grows from demand for onchain finance, US dollar, global payments, fintechs / neobanks as global payment rail grows. 2. Fed Funds Rate: Majority of Circle's revenue comes from Reserve Income which is simply the reserves backing USDC held in short-term US Treasuries. Fed Funds Rate * USDC supply is ~ Reserve Income. 3. Distribution Cost: Reserve Income that is shared with 3rd parties where USDC is held like Coinbase. Our Core Assumptions: 1. Total Stablecoin Supply grows to >$1T in the next 5 years. Not a crazy assumption given major banks like JPM Morgan, Bank of America, Citi Group, etc are considering launching their own stablecoins, the advancement of the GENIUS bill, Stripe launching stablecoin financial accounts, and Meta exploring stablecoin payouts to creators, etc. 2. USDC grows market share from 24% to 28% in the next 5 years. USDC supply grows from $60B today to $240B in 2028. 3. Distribution costs by Circle grow from 60% to 70% of revenue in 2029. The % of USDC in circulation held on Coinbase’s platform grew from 5% in '22 to 12% in '23 to 20% in '24 to 25% in March '25. Its reasonable that distribution cost from Circle will grow if more USDC is held on external platforms. 4. OPEX grows incrementally: this is the biggest assumption we make that Circle's growth doesn't require tremendously more headcount and OPEX -- we have OPEX going from ~29% in 2024 to ~10% in 2025. 5. Our upside case is at 30x earnings and ~$1B of net income in 2028, that's $30B marketcap in 2028. Note: we don't factor in Circle Payment Network or Circle's bridge CCTP which does $50B+ annualized bridge volume. These are all potential upside factors. Core risks to the model above: 1. Proliferation of bank issued stablecoins or other stablecoin providers take market share like AUSD, USDe, USDs, etc. 2. Fed Funds rate nose dives due to recessionary fears. 3. Distribution costs keep growing as USDC proliferates via external parties. 4. Tether continue to be the dominant incumbents in stablecoins and as stablecoins grow ex-US, USDT grows and market share grows relative to USDC. Comment below if you'd like the financial model. 𝘛𝘩𝘪𝘴 𝘢𝘯𝘢𝘭𝘺𝘴𝘪𝘴 𝘪𝘴 𝘧𝘰𝘳 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯𝘢𝘭 𝘢𝘯𝘥 𝘪𝘭𝘭𝘶𝘴𝘵𝘳𝘢𝘵𝘪𝘷𝘦 𝘱𝘶𝘳𝘱𝘰𝘴𝘦𝘴 𝘰𝘯𝘭𝘺 𝘢𝘯𝘥 𝘥𝘰𝘦𝘴 𝘯𝘰𝘵 𝘤𝘰𝘯𝘴𝘵𝘪𝘵𝘶𝘵𝘦 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘢𝘥𝘷𝘪𝘤𝘦. 𝘛𝘩𝘦 𝘷𝘪𝘦𝘸𝘴 𝘦𝘹𝘱𝘳𝘦𝘴𝘴𝘦𝘥 𝘩𝘦𝘳𝘦 𝘢𝘳𝘦 𝘴𝘰𝘭𝘦𝘭𝘺 𝘮𝘺 𝘰𝘸𝘯 𝘢𝘯𝘥 𝘥𝘰 𝘯𝘰𝘵 𝘳𝘦𝘧𝘭𝘦𝘤𝘵 𝘵𝘩𝘦 𝘷𝘪𝘦𝘸𝘴 𝘰𝘧 𝘈𝘳𝘵𝘦𝘮𝘪𝘴 𝘈𝘯𝘢𝘭𝘺𝘵𝘪𝘤𝘴 𝘐𝘯𝘤. 𝘈𝘭𝘸𝘢𝘺𝘴 𝘤𝘰𝘯𝘥𝘶𝘤𝘵 𝘺𝘰𝘶𝘳 𝘰𝘸𝘯 𝘳𝘦𝘴𝘦𝘢𝘳𝘤𝘩 𝘣𝘦𝘧𝘰𝘳𝘦 𝘮𝘢𝘬𝘪𝘯𝘨 𝘢𝘯𝘺 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵 𝘥𝘦𝘤𝘪𝘴𝘪𝘰𝘯𝘴.