Key Points:
- Circle achieved revenue of $1.7 billion in 2024, with 99% coming from USDC reserve interest income. Distribution costs with partners like Coinbase and BN totaled $1.01 billion, reflecting the key role of trading platforms in expanding USDC coverage.
- Total USDC supply has rebounded to $60 billion, with a 30-day average transfer volume of $40 billion, indicating market confidence and cross-chain adoption recovery. However, USDC remains sensitive to interest rate changes, competitive pressures, and regulatory developments.
- USDC usage continues to grow on major trading platforms, currently accounting for 29% of BN spot trading volume, benefiting from Circle's strategic partnerships.
- Looking ahead, Circle's next phase may depend on diversifying from passive interest income to active income sources, including tokenized assets, payment infrastructure, and capital market integration.
Circle Financial Overview
From an initial Bitcoin payment application to becoming a leading stablecoin issuer and crypto infrastructure provider, Circle has navigated numerous challenges over its 12-year journey. After explosive revenue growth in 2021 (450%) and 2022 (808%), growth slowed in 2023 with an 88% revenue increase, when USDC was impacted by Silicon Valley Bank's collapse.
By the end of 2024, Circle reported revenue of $1.7 billion, a 15% year-on-year growth, showing a more stable expansion trend.
Source: Circle S-1 Filing
However, profitability was compressed, with net profit and adjusted EBITDA declining 42% and 28% to $157 million and $285 million, respectively. Notably, Circle's financial data shows revenue is highly concentrated in reserve interest income, with distribution costs with partners like Coinbase and BN reaching approximately $1.01 billion. These factors drove the USDC supply recovery, growing 80% annually to $44 billion.
USDC On-Chain Growth
USDC is the core of Circle's business, launched in 2018 in collaboration with Coinbase. USDC is a tokenized form of the US dollar, allowing users to store value digitally and trade on blockchain networks, enabling near-instant, low-cost settlement. USDC uses a full reserve model, backed 1:1 by highly liquid assets, including short-term US Treasuries, overnight repurchase agreements, and cash held by regulated financial institutions.
Source: Coin Metrics Network Data Pro & Coin Metrics Labs
USDC's total supply has grown to approximately $60 billion, firmly establishing itself as the second-largest stablecoin after Tether's USDT. Despite market share pressures in 2023, it has rebounded to 26%, reflecting restored market confidence. Approximately $40 billion (65%) is issued on Ethereum, $9.5 billion on Solana (15%), and $3.75 billion on Base Layer-2 (6%), with the remainder distributed across Arbitrum, Optimism, Polygon, Avalanche, and other chains.
USDC's speed and transfer volume have also grown significantly, with a 30-day average transfer volume of around $40 billion. In 2025, USDC transfers primarily occur on Base and Ethereum, sometimes accounting for 90% of adjusted total transfer volume.
Source: Coin Metrics Network Data Pro
These indicators suggest that USDC usage continues to grow as stablecoins become increasingly attractive as USD alternatives and for payment and fintech infrastructure in emerging markets. This also reflects Circle's cross-chain strategy, with USDC widely available across major blockchains and supported by interoperability tools like the Cross-Chain Transfer Protocol (CCTP).
Reserve Composition and Interest Rate Sensitivity
For every dollar of USDC issued, Circle invests reserves in a high-liquidity, low-risk asset portfolio, such as short-term US Treasuries and cash deposits. This structure allows Circle to earn revenue from reserves while ensuring USDC holders' liquidity and redemption stability. Circle disclosed in its filing that reserve income was $1.6 billion in 2024, accounting for 99% of total revenue, indicating a highly interest rate-dependent income structure.
USDC reserves are primarily held in the Circle Reserve Fund, a SEC-registered government money market fund managed by BlackRock. According to Circle's monthly attestation, financial statements, and BlackRock Circle Reserve Fund, as of April 11, 535 billion USD (approximately 88%) of USDC reserves consist of U.S. Treasuries and overnight repurchase agreements with multiple financial institutions, all with maturities less than 2 months. Additionally, 11% of the reserves are cash deposited in regulated banks.
Source: Circle Transparency & BlackRock Circle Reserve Fund
Based on Circle's 2024 reserve income of 1.6 billion USD and approximately 44 billion USD in reserve assets, the annualized yield is estimated at 3.6%. If interest rates remain at current levels and USDC supply remains stable or grows, Circle's reserve income may remain steady.
Our previous research on USDC supply decline during periods of rising interest rates showed that Circle's reserve income is highly correlated with current rates, indicating the sensitivity of its income model to interest rate changes. With effective federal funds rates between 4.58-5.33% in 2024, what would Circle's prospects be if rates decrease? In its S-1 filing, Circle estimates that a 1% rate decrease could reduce stablecoin reserve income by 441 million USD, a key risk outlined in the document.
As Circle retains all earnings (unlike issuers like Ethena and Maker who pass interest to holders), its business model remains sensitive to future interest rate changes, competitive pressures, and regulatory evolution.
Distribution, Distribution, Distribution
Coinbase and BN's Role
Circle's IPO filing also revealed the importance of partners like Coinbase and BN (Binance) in driving USDC adoption. In 2024, total distribution costs were 1.01 billion USD, a 40% increase from 2023 and a 150% increase from 2022.
While the Coinbase-Circle relationship was well-known, the filing shows their financial connections are even closer. In 2024, Coinbase earned 908 million USD from USDC-related activities, representing about 13.8% of its total revenue. Under a revenue-sharing agreement with Circle, Coinbase receives 100% of interest from USDC held on its platform and 50% of interest from USDC held elsewhere.
As USDC supply on the Coinbase platform increased from 5% in 2022 to 20%, most economic benefits seem to accrue to Coinbase. The filing also disclosed a one-time payment of 60.25 million USD to BN to facilitate distribution similarly.
Source: Coin Metrics Market Data Feed
Observing spot trading activity on key partner trading platforms, USDC now represents 29% of BN's spot trading volume (approximately 6.2 billion USD), surpassing its share after FDUSD's recent depegging, second only to USDT at around 50%. On Coinbase, USDC drives approximately 90% of combined USD and USDC spot trading.
Despite high costs, Circle's distribution efforts have translated into significant adoption at the trading platform level, driving USDC liquidity and 10 billion USD in credible spot trading across platforms.
Beyond Trading Platforms: Empowering DeFi and Business
By distinguishing USDC supply held in smart contracts versus external owned accounts (EOA) on Ethereum, we can understand its distribution across user wallets and applications.
Currently, approximately 30 billion USD is held in EOA, a 66% year-on-year growth, while about 10 billion USD is in smart contracts, growing approximately 42% year-on-year. EOA balance growth may reflect increased platform custody and personal user holdings, while smart contract growth indicates USDC's importance as collateral in DeFi lending markets and liquidity in decentralized exchanges (DEX).
Source: Coin Metrics Network Data Pro
USDC continues to play a foundational role in DeFi lending markets, with protocols like Aave, Spark, and Morpho locking over 5 billion USD (representing the portion of USDC supply not being lent). For collateralized debt protocols like Maker (now Sky), approximately 4 billion USD of USDC supports Dai/USDS issuance through its peg stabilization module.
Source: Coin Metrics ATLAS & Reference Rates
Similarly, USDC is a key liquidity source for various DEX pools, facilitating stable value trading. It increasingly supports on-chain forex markets, especially with the rise of other fiat-pegged stablecoins like Circle's MiCA-compliant EURC.
Source: Coin Metrics DEX Data
Conclusion
USDC's on-chain growth reflects market confidence recovery, but Circle's filing also highlights key challenges, particularly high distribution costs and severe dependence on interest income. To maintain momentum in a low-interest environment, Circle aims to diversify revenue through active product lines like Circle Mint and by expanding tokenized asset infrastructure through acquiring Hashnote, the largest issuer of tokenized money market funds.
With increasing regulatory clarity, especially the SEC's stance that stablecoins are not securities, Circle is well-positioned. However, it now faces increasingly fierce competition from overseas issuers like Tether and new U.S. competitors leveraging policy change momentum. Although Circle's valuation remains undefined, its IPO will mark the first direct public market investment opportunity in stablecoin infrastructure growth.
