Circle Internet Group

Main products and services:

1. USDC (USD Coin): • The world's largest regulated digital dollar, fully backed by dollar reserves, fast and stable, suitable for global business. • Widely used in exchanges, DeFi (Decentralized Finance), payment, and other scenarios.
2. EURC: • The world's largest regulated digital euro, pegged 1:1 to the euro, fully supported by euro reserves, providing fast and stable global business payments.
3. USYC (Tokenized Funds): •Institutional-grade tokenized money market fund, which can be exchanged for USDC almost instantly.
4. Circle Payments Network (CPN): •A globally stable payment network that provides integration for businesses, supporting global payments based on stablecoins.
5. Mint: • Liquidity services that allow users to mint, redeem, and manage USDC directly from Circle on a global scale.
6. Wallets (Developer Services): • Developer services that facilitate the integration of digital asset storage, payment, and trading into applications.
7. Contracts (Developer Services): • Developer services, providing a customizable smart contract template library for tokenization and workflow automation.
8. CCTP (Cross-Chain Transfer Protocol): •Developer services allow USDC to be natively transferred between supported blockchains, which is safer and faster than traditional bridging.
9. Paymaster (Developer Services): •Developer services allow users to pay Gas fees using USDC, enabling a seamless trading experience. Business Characteristics: •Globalization: Supports capital flow in over 185 countries/regions, with more than 1,000 global partners. •Compliance: Holds 55 licenses globally, including money transmission licenses (MTL) in 46 states in the United States, Washington D.C., and Puerto Rico, as well as a BitLicense from the New York State Department of Financial Services (NYDFS). • Security: Emphasizes regulated stablecoin trading, prioritizing safety. • Interoperability: Promote the seamless circulation of USDC across different blockchains through technologies like CCTP. The core of Circle's business model lies in providing a bridge between traditional finance and digital assets. By issuing and managing stablecoins, as well as offering related services such as payments, liquidity, and developer tools, it aims to promote the development of the digital economy.

Circle's profit model mainly revolves around the issuance and management of its core product USDC stablecoin, as well as the related financial services it provides. According to public information and industry analysis, its main sources of profit include:

1. Reserve fund interest income: •This is the main source of income for Circle. USDC is a stablecoin pegged to the US dollar at a 1:1 ratio, which means that for every USDC issued, Circle holds an equivalent amount of US dollar reserves in a bank account or invests in short-term, low-risk assets (such as U.S. Treasury bonds). •The interest income generated from these reserves is the core profit source for Circle. When market interest rates rise, its interest income can significantly increase; conversely, when the Federal Reserve cuts interest rates, its profits may be directly affected. • The scale of reserves directly affects its profitability. The larger the circulation of USDC, the larger the scale of its reserves, which in turn brings more interest income.
2. Transaction and payment service fees: •Circle provides stablecoin-based payment services for businesses through its Circle Payments Network (CPN) and other payment solutions. These services may charge transaction fees or platform usage fees. •The Mint service allows institutional users to mint and redeem USDC, and this part of the service may also incur fees.
3. Developer service fees: •Circle provides a range of developer tools and services, such as Wallets, Contracts, CCTP, and Paymaster. These services may generate revenue through API call fees, subscription fees, or value-added service fees. •For example, Paymaster allows users to pay Gas fees using USDC, which could bring additional revenue to Circle.
4. Other Financial Services: • In addition to stablecoin issuance, Circle may also offer other financial services related to digital assets, such as the institutional-grade tokenized money market fund USYC, which may also generate management fees or service fees.

The role and significance of the profit model: • The core driving force of the stablecoin ecosystem: Circle's profit model enables it to continuously invest in research and development, maintain and expand the USDC ecosystem, ensuring the stability and compliance of USDC, thereby attracting more users and institutions to use USDC for trading and payments. • A bridge connecting traditional finance and the digital economy: Through reserve management and compliant operations, Circle brings the stability of traditional finance into the digital asset space, reducing the volatility risk of digital assets, making them more suitable for everyday payments and commercial applications. • Promote digital payment innovation: Its stablecoin-based payment network and developer tools reduce the cost and time of cross-border payments, improve efficiency, and provide infrastructure for global digital payment innovation. •Compliance and Trust: By actively seeking regulatory licenses globally and being transparent about reserve management, Circle has enhanced user and institutional trust in its stablecoin, which is crucial for the long-term sustainability of its profit model. •Affected by the macroeconomic environment: Its profit model is sensitive to interest rate conditions, and changes in the Federal Reserve's monetary policy will directly impact its main sources of income. This means that Circle's profitability is influenced to some extent by the macroeconomic environment. Overall, Circle's profit model is the core support for its role as a stablecoin issuer and blockchain financial service provider, enabling it to occupy an important position in the rapidly evolving digital economy and continuously promote the popularization and application of digital assets.

Circle, as the main issuer of the USDC stablecoin, has had a profound impact on the cryptocurrency market. Its influence is mainly reflected in the following aspects:

1. USDC as the Core Role of Stablecoins

•Hedging tools: During severe fluctuations in the cryptocurrency market, investors can convert highly volatile crypto assets like Bitcoin and Ethereum into USDC to hedge against risks and protect asset value. The 1:1 peg of USDC to the US dollar makes it a "digital dollar" in the crypto market, providing investors with a stable means of value storage. • Trading medium: USDC is widely used in various cryptocurrency exchanges and decentralized finance (DeFi) platforms as one of the main trading pairs. It makes trading between crypto assets more convenient and efficient, reducing transaction costs and slippage. •Liquidity providers: USDC provides significant liquidity to the cryptocurrency market. Its large market capitalization and widespread acceptance allow funds to flow quickly between different platforms and protocols, enhancing market depth and efficiency.

2. Impact on DeFi and Cross-Border Payments

•Promoting DeFi Development: USDC is an important component of the DeFi ecosystem, widely used in lending, collateral, yield farming, and other DeFi applications. Its stability allows DeFi protocols to operate more reliably, attracting more users and funds into the DeFi space. • Optimize cross-border payments: USDC utilizes blockchain technology to achieve efficient and low-cost cross-border payments. Compared to traditional bank international remittances, USDC offers faster transaction speeds, lower fees, and is not restricted by bank operating hours, providing a convenient payment solution for individuals and businesses worldwide.

3. The Impact on Cryptocurrency Market Volatility

• Reduce market volatility risk: The emergence of stablecoins, especially compliant and transparent stablecoins like USDC, has introduced stability to the cryptocurrency market. It provides market participants with more options when facing volatility, allowing them to lock in profits or reduce losses through stablecoins, thereby mitigating the extreme fluctuations in the market to some extent. • Attracting traditional financial institutions: The compliance and stability of USDC have attracted an increasing number of traditional financial institutions to enter the cryptocurrency space. The participation of these institutions brings more capital and expertise, helping the crypto market move towards maturity and mainstream adoption.

4. Impact on Other Cryptocurrencies

•Impact on mainstream cryptocurrencies (such as BTC and ETH): The popularity of USDC has made it easier for fiat funds to enter the cryptocurrency market, which indirectly increases the demand for mainstream cryptocurrencies. At the same time, during market downturns, investors may shift their funds to USDC, which could lead to short-term selling pressure on mainstream cryptocurrencies. However, in the long run, the healthy development of stablecoins contributes to the expansion of the entire cryptocurrency market. •Impact on other stablecoins (such as USDT): USDC and USDT are the two giants in the stablecoin market, and there is a competitive relationship between them. The compliance and transparency of USDC make it more favored by institutions and regulators in certain aspects, which may affect its market share. However, USDT still holds a dominant position in the market due to its first-mover advantage and large user base. Together, they drive the development and innovation of the stablecoin market.