After Circle's IPO, as of 22:00 Beijing time, its market value is approximately $27.8 billion. The first day's increase was 168.48%, and the second day's increase was 29.4%. It is evident that the rise in Circle's stock price is largely driven by investor sentiment.

From the data, the total operating revenue for the entire year of 2023 is $1.45 billion, with a net profit of $268 million; for the entire year of 2024, the total operating revenue is $1.676 billion, with a net profit of $156 million. Comparing the two years, the total operating revenue has not changed much, but the net profit has decreased significantly.

Circle's two core issues are: ① Single source of profit: Circle's main income comes from interest earnings on (short-term) U.S. Treasury bonds. ② High distribution costs: The distribution of USDC heavily relies on a network of partners, especially exchanges like Coinbase. High distribution costs greatly compress Circle's net income.

The revenue sharing ratio for USDC reserves between Coinbase and Circle is as follows:

USDC on the Coinbase platform: Coinbase retains 100% of the reserve income (such as U.S. Treasury bond interest). This income comes from USDC stored on the Coinbase platform (such as Coinbase Prime, the exchange).

USDC on the Circle platform: Circle retains 100% of the reserve income, applicable to USDC held through Circle's own channels like Circle Mint.

USDC on other platforms: For USDC held on non-Coinbase or Circle platforms (such as decentralized platforms like Uniswap, Morpho, Phantom, or external wallets), the reserve income is shared between Coinbase and Circle at a 50:50 ratio. This portion is referred to as the "residual payment base."

The IPO is not the end for Circle, but rather the beginning. Circle's biggest task moving forward is to quickly seize market share.

Currently, in the stablecoin landscape, USDT has a market value of $155 billion, accounting for 62.05% of the entire stablecoin market; USDC currently has a market value of nearly $60 billion, accounting for 24.21% of the entire stablecoin market. USDC is actually trying to capture market share from USDT.

Is it easy to capture? The challenge is quite significant: USDT's large market share is mainly due to its first-mover advantage (it launched before USDC), widespread application scenarios, low operating costs, and high profits (Tether does not have to pay high fees to distribution partners).

Inferring Circle's future corporate strategy: deepen cooperation with traditional financial institutions in the U.S., launch more tokenized assets (cutting into the RWA sector), while also seizing emerging markets in Africa and Latin America, as well as the cross-border payment sector, to achieve market diversification and profit diversification.

A reasonable valuation for Circle ultimately hinges on its ability to grow market share and diversify profits. If these two aspects do not meet expectations, achieving a market value of over $40 billion will be challenging. Even the current market value of $27.8 billion may be considered overvalued.

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