Circle, the company behind USDC stablecoin, recently filed for an IPO, with a rumored valuation between $4 billion and $6 billion. This move is being closely observed across the crypto and fintech sectors as many believe it could be a turning point for stablecoins and broader market confidence. 2024 saw Circle’s revenue rise by 15% to reach $1.68 billion, fueled by a surge in USDC’s circulating supply to $44 billion. However, despite this growth, the firm’s net income fell by 42% to $157 million and adjusted EBITDA dropped 28% to $285 million. This points to increased pressure on the company’s cost structure. 13/Final thoughts@circle is currently being priced like a traditional crypto business—cyclical, interest rate-dependent, and not diversified enough. If @circle can transition into a payments network with high margins and strong market dominance (like Visa or Mastercard), … — Lorenzo Valente (@LorenzoARK) April 3, 2025. Lorenzo’s analysis reveals a key issue: Circle’s distribution costs are substantial. Of $1.7 billion in revenue, $1 billion went to distribution, with $900 million paid to Coinbase, one of Circle’s major partners and the largest crypto exchange. This partnership allows Coinbase to capture 100% of interest revenue from USDC held on its platform and split 50/50 with Circle on external USDC holdings. Recent estimates suggest that Coinbase profited approximately $600 million from Circle-related revenue last year, representing nearly 25% of Coinbase’s current $42 billion valuation. Lorenzo highlights the reliance on distribution and emphasizes how this dependency on Coinbase has compressed Circle’s margins and limited its potential for growth. 3/Final thoughts: With a projected valuation between $4 to $6 billion, Circle’s EBITDA multiple would be in line with fintech peers like PayPal and Block but lower than payment giants like Visa or Mastercard. “This isn’t a cheap IPO,” Lorenzo notes, pointing out that Circle’s declining profitability and reliance on interest rates makes it appear more like a cyclical crypto business than a high-margin payments platform.