Hey Fundamental Investors,

The two biggest secular tailwinds right now are:

1. Proliferation of AI and the seemingly infinite demands for GPUs
2. Proliferation of stablecoins as a global payment rail.

There’s been clear public company bets that investors have been making, Coreweave for AI (see the price chart:

and now potentially Circle for stablecoins.

(Aside: a third secular tailwind I would argue is the financialization of the world and more and more individual investors actively investing / trading to exercise agency on their economic future — I would argue a Robinhood and Hyperliquid largely benefit from this tailwind).

1. Fundamentals Update

It’s IPO season and we have Chime and Circle both doing their roadshows.

Circle upsized their valuation to $7.2B up from $6B and Blackrock will be investing into Circle’s IPO.

Circle is planning to price on the NYSE this Wednesday, June 4th.

Naturally, we built a Circle financial model that we’re sharing with our readers:

Here’s what you need to know before Circle prices.

Background

I remember Circle back when I was a summer analyst at Insight in 2024 cold-emailing the founder / CEO Jeremy. At the time Circle was building a Coinbase competitor to allow consumers to buy BTC easily and launched a Venmo competitor to build a “really efficient, instantaneous and secure way to send and spend and receive money".

Fun fact: my co-founder Anthony at Artemis was an early engineer at Venmo and remembered when Circle Pay came out and how people were freaking out internally. Turns out network effects is a real thing and Circle Pay and other competitors never put a real dent into Venmo's growth:

Circle started off as a consumer company with Circle Pay trying to help push Bitcoin into the mainstream in 2013-2016 after securing one of the first BitLicenses from the NY Department of Financial Services. Circle Pay ultimately didn't take off the way Jeremy and Sean had hoped.

In 2018, Circle raised $110m from Bitmain (yes that ASIC Bitcoin mining hardware company) to do a bunch of stuff from Circle Invest, a mobile similar to Coinbase to buy / sell crypto, acquiring Poloniex a US crypto exchange. But most importantly to focus on USD coin which was pegged to the US. Dollar -- this was the genesis of USDC and the core business of Circle today.

​Circle and Coinbase launched Centre, a consortium with Coinbase a standard fiat for the internet with the aim to launch USD Coin. Circle then became the first stablecoin issuer that allows customers to token their dollars into USDC and redeem USDC through both Coinbase and Circle. The initial GTM strategy was working with exchanges, custodians, dApps (yes back in the day they were called decentralized apps), and wallets. Centre ultimately was shut down but in exchange Coinbase got a stake in Circle and a new revenue share agreement for USDC:

• "Previously, Coinbase and Circle operated under a revenue-share agreement outlined in financial disclosure forms from both firms, with the split based on the amount of USDC distributed (or minted) by each company, as well as the amount of USDC held on each company’s platform. Under the new agreement, revenue will still be split based on the amount of USDC held on each platform, although interest income will now be equally shared from any off-platform USDC, such as in DeFi wallets, taking the focus away from which company minted it originally."

​

From 2018 to 2025, Circle pursued a failed SPAC, USDC launched and grew to at its peak ~42% of marketshare but then USDC temporarily lost its peg and subsequent marketshare to Tether, the stablecoin issuer behind USDT.

​Which brings us to Circle in June 2025 -- the #2 stablecoin issuer in the world at 26% marketshare and USDC which sits at $60.3B up ~92% YoY.

Circle's revenue has been growing quickly from 2020 to the present, particularly inflecting from 2022 to 2023 from $722m to $1.5B as fed funds rates rose and stablecoin supply grew from DeFi.​

And in 2024 / 2025, we've then seen a torrid growth from REAL stablecoin payments with the Stripe acquisition of Bridge, a stablecoin orchestrator that allows businesses to move money between fiat and crypto seamlessly.

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. There's concern that Circle will ultimately trade on a bank given their business model is highly sensitive to 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. But first we look at Q1’25 financials.

Q1’25 Financials

Circle updated their Q1'25 financials in their amended S-1 and metrics are impressive:

Annualized revenue = $2.3B growing 59% YoY
Annualized gross profit = $932M growing 46% YoY
Annualized net income = $259m growing 32% YoY

That would make Circle one of the fastest growing fintechs .. yes even faster than Robinhood in Q1’25!

Circle is pricing at $27-$28 so midpoint would be $7.2B Marketcap or $6.2B Enterprise Value.

Here are the digital finance comps:

EV / Sales = 4.45x (median fintech comp = 5.5x)
EV / Gross Profit = 6.7x (median fintech comp = 8.3x)
EV / Net Income = 12.6x (median fintech comp = 31.3x)

Why am I annualizing numbers? Circle isn't a software business that has recurring revenue.

However, FY2024 financials were backwards looking and USDC supply 2x-ed already from ~$30B in June '24 to ~$60B in June '25.

I think most people would assume stablecoin supply will only grow with the GENIUS act passing and growing adoption by fintechs / merchants.

The current quarter financials are a better reflection than looking at Last 12 Month in a business that is tied to growing supply.

Circle: the $30B Marketcap Bull Case

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 business TODAY boils down simply to:

1. USDC supply growth: the amount of USDC minted and outstanding driven by onchain finance, payments, digital dollar, etc.

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.This isn't an unreasonable 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 $7.7B*12 = ~$90B+ annualized bridge volume.

CPN is likely Circle’s big push to monetizing stablecoin flows and payments similar to what Silvergate did with SEN

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.

Circle: the $19B Marketcap Base Case

Based on our Circle financial model, Circle has room to grow even at $7.2B or $27.50 a share.

In our base case, we assume USDC grows 4x to ~$240B up from ~$60B today, fed funds falls to 3%, revenue distribution costs grows to 67% (up from 60%), and headcount continues to grow only at 10% YoY.

Circle in our base case could grow to $19B market cap with ~$6.2B revenue, ~$2B gross profit, $950M net income growing 25% YoY and 20x earnings ($905m NI * 20x)

That implies 22.4% IRR over the 3 year period. Not crazy if Circle does price at the mid range of $27.5.

Circle: the $5B acquisition by Coinbase

I was shocked when a former Coinbase Ventures employee Ryan Yi wrote out a clear and public letter spelling out why Coinbase should buy Circle.

The argument is essentially Coinbase could capture all revenue share from USDC versus splitting the 50/50 USDC that is off platform.

Ryan as a former employee of Coinbase Ventures must have seen the dynamics between Circle and Coinbase and effectively $5B is the downside case for Circle in an IPO which is a 30% downside at a $27.50 IPO.

2. Market Update

Staking services were the top performer in the last 7 days +18% followed by AI coins which were up ~12%.

In particular Rocketpool was up 22% in the last week while TVL is up 37.5% in the last month.

3. Stablecoins Update

Stablecoins are real… but the question are how much of the volumes are used for payments.

Everyone loves this graph of how there is $2.3T / month adjusted stablecoin volumes that excludes MEV activity and intra-centralized exchange transactions.

But of the $2.3T/month, how much of it is actual payments? We finally found the answer after our team surveyed over 20 stablecoin teams with estimates from 11 firms to power the breakdown of real use cases of stablecoins.

The answer is closer to ~$72.3B which is 3% of stablecoin adjusted transfer volume.

Here are some other key takeaways:

1. Stablecoin payments within the sample as of February 2025 annualized at a $72 billion run rate +88% YoY.

In comparison, Visa did $13.2T in annual volume growing 7% YoY in 2024. Stablecoin payments (from the sample) is still early and at ~0.55% the volume of Visa but growing.

2. Stablecoin B2B payments are still in the early phases at $36B annualized up 315% YoY.

There is still so much room to grow - Visa estimates B2B payments globallyat $145T.

3. Tron was the leading blockchain used in our sample at 60% followed by Ethereum at 33%.

4. Tether was the primary stablecoin used for global transactions in our sample set at 86%.

5. The USA, Singapore, Hong Kong, Japan, and the UK were the top stablecoin sending countries.

Well that’s a wrap to our weekly fundamentals. Look forward to reporting on the Chime and Circle IPOs and continue to highlight projects that benefit from the growing volume of real stablecoin payment volume.

Cheers,

Jon