Reasons for Optimism about CRCL - A Detailed Breakdown of Jiang's Logic
Is CRCL's profit insignificant because it will be shared?
Early promotion costs do not necessarily indicate that it will always be a high-cost industry. If network effects are achieved and user perception is established, then high costs are not a problem.
The stablecoin sector where CRCL operates is a winner-takes-all market; the larger the scale, the greater the influence.
The correct strategy for CRCL is to continuously distribute profits. One can observe the growth rate of USDC on CMC; whether over the past year, month, or week, its growth rate has consistently outpaced USDT. This indicates that the money is being spent wisely, which is the right thing and the right trend.
Amazon operated at a loss for 20 years to achieve scale and network effects.
Pinduoduo incurred losses for several years, aggressively subsidizing to establish a low-price perception.
JD.com faced near bankruptcy due to years of losses while building its logistics network, causing its founder to age overnight.
If one calculates their meager profits while ignoring the growth from network effects and the strategic nature of these actions, it is shortsighted.
From another perspective, when Taobao and JD.com fought for instant retail market share, they spent heavily to challenge Meituan's market share and user perception. What would be the cost of challenging them? Once stablecoins are integrated into traditional finance from a compliance standpoint, challenging CRCL will become even more difficult.
With the interest rate cut cycle, is CRCL's interest income declining, making it less attractive?
On one hand, the growth rate of scale will offset or even overshadow this issue. Next year, the stablecoin market is likely to exceed 200 billion. Many may find this unreasonable, given that it only grew by 40 billion last year. However, next year’s growth is expected due to the implementation of stablecoin legislation, which will lead all compliant institutions to adopt it—CRCL is already well-prepared for this.
On the other hand, interest rate cuts are gradual, and long-term rates, based on dot plots or comprehensive estimates, may only reach around 3% in a few years.
Of course, there’s no need to get too caught up in the details of these calculations; a vague correctness is better than an accurate mistake.
Here, one should not use the current 80 billion USDC scale to calculate future profit-sharing, as the scale is set to increase significantly next year. It is also important to note that the profit-sharing agreement with COINBASE is merely a business arrangement, which can be negotiated in capitalism— the larger CRCL's scale, the stronger its influence.
In other words, the larger the scale, the greater the earnings, but interestingly, operational costs may decrease. Today, CRCL encourages everyone to use it more, offering incentives; in the future, people will be eager to use it and pay fees.
Back in the day, Sun's TRX allowed free USDT transfers, but now the fees are higher than ETH. Why? Because the network effect has been established, with more users and a solid user perception.
These logics are quite simple. Jiang seems to have only studied some superficial data without delving into deeper thoughts—at this moment, my thinking even diverges, and I realize that there are no gods in this world. When I first started learning, Jiang was an unattainable master, but now, looking at his views, I have some doubts and feel that the strength these views exhibit is not as formidable as imagined.
In the competition among different stablecoins, can CRCL maintain its position?
The competition among stablecoins is also a battle for user perception, which is one of the most resource-intensive and time-consuming types of warfare. How many people want to dethrone Sun's TRX? Vitalik even stated that if TRX succeeds, he would be disappointed in blockchain, yet the hundreds of billions in TRX USDT have become Sun's daily source of income.
Now, with 80 billion USDC, CIRCLE has spent decades of effort, obtained countless licenses, integrated the world's top compliance resources, partnered with COINBASE, signed a memorandum with BlackRock, received the highest stablecoin rating from the S&P 500 index (while USDT received the lowest, and the recently listed FDUSD received the second lowest), and the U.S. stablecoin legislation is directly modeled after USDC. To defeat USDC is not only difficult, but time is also running out for other competing stablecoins.
Think about it: would you use USDC if a new USD8 came along offering a 20% interest subsidy? Sun would also love to create a stablecoin with a 20% interest subsidy, but with slow growth, it would likely fail.
Competition will always exist; just because everyone is making cars doesn’t mean Tesla will fail. In fact, after Tesla opened its technology, everyone started making cars, and user perception opened up.
In this world, the most important issue for people is the safety of their funds. Do you believe that the more obscure stablecoins there are, the more user education is needed? And the more user education there is, the funds will ultimately return to the largest, safest, and most recognized USDC.
Morgan's own stablecoin, can CRCL compete? Wrong.
Specifically regarding JPMorgan, there is a significant blind spot. JPMorgan has already issued its own stablecoin called JPM Coin (JPMD), which is an institutional-level dollar deposit token representing customer deposits at JPMorgan. It utilizes blockchain (like Coinbase's Base chain) to enable 24/7 instant payments, much faster than traditional bank transfers, and can generate interest. This represents a new model of integration between traditional finance and digital assets, but it is not the same as USDC; it is more akin to Q coins. Q coins cannot compete with USDC.
Why doesn’t JPMorgan create a true stablecoin? The real question is why they would want to do it and whether they can succeed.
JD.com and Taobao are impressive; why do they tolerate Pinduoduo's growth? Why not just create an app like Pinduoduo? These questions are simple; what is seen is merely an "80 billion scale," and what is perceived is just a "low-price mentality," behind which lies long-term accumulation and substantial ongoing investment that builds an invisible moat.
In the future, will USDC 100% be the leader? At least it can be considered a high-probability event.
Finally, the view that if Morgan enters the game, everything will be over is somewhat akin to saying Binance is so powerful that if it creates a phone, it can defeat Xiaomi—this is a bit strange.
Is CRCL essentially a bank?
Banks earn from interest spreads, and CRCL also earns from interest spreads, so is CRCL a bank? Is this logic flawed?
Rabbits eat grass, and elephants also eat grass, so are elephants related to rabbits? Is this logic flawed?
This logical flaw is at the level of common sense.
Let’s compare carefully:
Banks operate a tough business; when users deposit money, they take that money and lend it out, giving users 1% interest on deposits. For example, if they invest in Evergrande, they earn 5% interest, and the 4% difference is the bank's profit. This is the bank's tough business, which is akin to selling drugs while earning money from selling flour, bearing the risk of being shot (the principal lent out may not be recoverable and become bad debt).
CRCL is a good business; when users deposit money, it does not need to pay interest. It can buy government bonds and earn risk-free returns. The larger its scale, the stronger its network effect (more bank deposits do not change the essence of the business). As USDC's scale increases, the network effect and monopoly effect become stronger.
Moreover, CRCL may experience a moment of qualitative change once its scale is sufficiently large for enterprise and institutional settlements, at which point charging fees would be reasonable.
Think about VISA, with a market value of hundreds of billions; what does it do? It simply collects money after the network effect is established.
For the stablecoin sector, there is support from national-level legislation, the backing of government bonds that the world can absorb, allies like COINBASE, BlackRock, and JPMorgan, decades of accumulation, hundreds of licenses, support across dozens of chains, and CRCL is about to obtain the first stablecoin banking license in the U.S. Which bank can compete with it? Agricultural Commercial Bank or ZA BANK?
There will be countless banks worldwide, but only one stablecoin will occupy 80% of the market share in the future—I believe it is highly likely to be USDC.
In the future, during the era of AI AGENTS, all applications downloaded from app stores and all AGENTS in phones will choose compliant stablecoins, while those that cannot be downloaded from stores for gambling or adult content will likely rely on USDT.
Is it certain that CRCL is the same as a bank?
CRCL's opportunity comes from compliance; decentralization will find the best practice in CRCL's expansion. In the future, international trade and bank settlements will only accept compliant USDC and not non-compliant USDT. As for more decentralized stablecoins, we in the crypto community have created a few, like AMPL, but they are of no use.
To achieve this, one must be recognized—once recognized, use the power of the state to push it forward.
Adults, the times have changed; we do not need to insist that a lack of censorship is decentralization. Decentralization is a form of technology, just like AI. Although some criticize OPENAI and DEEPSEEK for being censored, what’s wrong with adults discussing adult topics? But does this affect the expansion and greatness of AI?
There is no freedom without order.
As for Jiang's conclusion that "even if not eliminated by policy, it will be eliminated by the market," the possibility of being eliminated by policy is already negligible, as the legislation's implementation benefits from the support of both the Democratic and Republican parties. As for the market, the largest player is USDT, and I believe it is only a matter of time before USDT is defeated by USDC. Let’s wait and see; it could be as soon as next year or as long as three years. Please keep an eye on the changes in market share between the two on CMC; I check it happily every day.
Regarding issuers spending money to seize profits, the strongest competitor is PAYPAL, which has 40 million users and is also using subsidies. PYUSD is currently growing rapidly, but it still has a long way to go to defeat USDC. It is likely to remain an internal currency, and such subsidizing behavior will lead to rapidly increasing costs as scale grows, ultimately becoming unsustainable.
You cannot defeat a faster and stronger opponent using the same methods. This is common sense.
Finally, @justinsuntron should focus on continuing to subsidize USDC to keep TRX as the largest settlement layer for USDC, and even have the opportunity to become a grassroots version of CRCL's public chain ARC. Their own path will definitely be through institutions and AGENTS.
@cz_binance @heyibinance, instead of playing defense in the crypto space with ASTER, it would be better to invest heavily in CRCL for expansion.
In the next decade, the three things most relevant to the crypto space that can maximize value are: BTC, stablecoins, and trading.
Satoshi Nakamoto and BTC
Stablecoins and CRCL
Trading and Binance
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