Author: Umbrella, David, TechFlow
Just last night, the stablecoin USDC issuer Circle released its Q2 performance report.
As its first financial report after the IPO, the data provides an important basis for the market to assess the true value of this "first stablecoin stock". By deeply analyzing key financial indicators, we can more clearly see Circle's growth momentum and potential challenges.
USDC Expands Strongly, but Revenue Structure is Single
From the information disclosed in the financial report, the following data points need focused attention.
Core Business Indicators: USDC Strong Expansion
First, the most significant aspect in the report is the dual growth of USDC circulation and market share.
By the end of Q2, USDC circulation reached $61.3 billion, a year-on-year surge of 90%, growing 49% year-to-date. As of August 10th, this figure further climbed to $65.2 billion, indicating continuous growth momentum. In terms of stablecoin market share, USDC solidly occupies about 28% of the market, consolidating its position as the second-largest stablecoin.
Secondly, USDC's trading activity experienced explosive growth.
USDC's on-chain transaction volume reached $5.9 trillion, a year-on-year surge of 540%. This indicator's explosive growth not only reflects USDC's rapidly expanding usage scenarios but also reveals the important trend of the entire stablecoin ecosystem transforming from mere value storage to a payment settlement tool.
Financial Performance: Strong Revenue Growth but Structural Imbalance
The report shows total revenue of $658 million in Q2, a year-on-year growth of 53%, of which:
- Reserve interest income: $634 million (96.4% share), year-on-year growth of 50%
- Subscription and service income: $24 million (3.6% share), year-on-year growth of 252%
In this revenue structure, Circle's dependence on reserve interest income is still evident. Although subscription service income grew by 252%, its absolute value remains tiny.
Circle heavily relies on reserve earnings from the Federal Reserve's high-interest environment, and this dependence on a single income source constitutes its greatest operational risk. Once the Federal Reserve enters a rate-cutting cycle, Circle's profitability will face a severe test.
Additionally, an easily overlooked point is that IPO-related high expenses mask the actual operational performance.
Looking at the overall picture, Circle's net loss in Q2 reached $482 million. Although this absolute value is large, if we break it down:
Total IPO-related non-cash expenses were $591 million
- Equity incentive expenses: $424 million
- Convertible debt fair value adjustment: $167 million
Adjusted EBITDA was $126 million, growing 52% year-on-year.
In other words, after removing IPO-related expenses, Circle's actual operational performance remains robust. The adjusted profitability indicators show that the company's core business maintains healthy growth, which explains why the stock price rose rather than fell after the report's release.
Selling Pressure Under High Valuation
On the same day the report was released, Circle also announced a secondary offering of 10 million shares.
Calculated at the day's closing price of $163.21, this offering will raise $1.63 billion. Compared to the IPO price of $31, early investors' return rate exceeds 426%, with over $1 billion in cash-out amount.
Among this, although Circle's CEO Allaire has sold 35,780 shares, he still maintains 23.9% voting rights.
From the comprehensive financial report data, we can see that USDC's network effect is accelerating. However, Circle's challenges are equally significant:
Overly dependent revenue structure on interest environment, emerging competitors (like PayPal's PYUSD), and regulatory policy uncertainties are issues that must be addressed.
The Q2 financial report provides a basis for assessing whether Circle is overvalued, but the final judgment still requires observing performance in the next few quarters, especially Circle's adaptability during interest rate environment changes.
Strategic Transformation: Circle's Path to Diversification
The strategic measures disclosed by Circle in the Q2 financial report and subsequent conference call also clearly outline the company's path from stablecoin issuer to comprehensive financial infrastructure provider.
This might also be a response to the single revenue structure revealed in the report.
Circle announced the launch of its self-developed blockchain called Arc in the second half of 2025, which quickly became a market discussion focus. According to official disclosure, Arc is an open public chain designed specifically for stablecoin finance, using USDC as the native gas fee token, focusing on payment and foreign exchange application scenarios.
Interestingly, stablecoin giants seem to have unanimously chosen the same path.
Tether is developing Stable, payment giant Stripe is collaborating with top VC Paradigm to launch Tempo, and the race for stablecoin payment chains has begun. Just today, OKX announced an upgrade to X Layer, also entering this track.
In this competition, Circle's advantages are obvious: compared to Tether facing regulatory pressure, Circle has inherent compliance advantages, with the Trump administration's GENIUS Act clearing policy obstacles; compared to payment-experienced Stripe, Circle has the network effect from USDC's 24% market share and the trust foundation of over 1,800 institutional clients.
The deeper business logic is that Arc's launch directly addresses Circle's biggest weakness—over-reliance on interest income.
Currently, 96% of Circle's income comes from USDC reserve fund Treasury interest, which will become a fatal weakness during a rate-cutting cycle. By controlling blockchain infrastructure, Circle can not only obtain chain transaction fees but also open new revenue modes like staking, while reducing dependence on third-party blockchains and increasingly growing distribution costs.
Besides launching the self-developed public chain Arc, Circle also mentioned deepening cooperation with Binance, FIS, and Corpay in the Q2 report and conference call.
This includes promoting Circle wallet technology with Binance and using the tokenized market fund USYC in Binance's institutional trading products as yield and OTC collateral; combining global forex with USDC through Corpay to provide 7x24 settlement for enterprises worldwide; collaborating with FIS to enable US financial institutions to provide domestic and cross-border USDC payments through FIS's Money Movement Hub, combining Circle's blockchain native infrastructure with FIS's real-time payments to unlock faster, lower-cost compliant digital dollar transactions.
Besides these three enterprises, Circle also mentioned cooperation directions with mainstream exchange OKX and fintech company Fiserv in the report.
Overall, Circle's Q2 financial report presents a portrait of a company in a critical transformation period. It is both a leader in the stablecoin track, enjoying growth dividends from USDC's network effect, and a financial technology company facing structural challenges that must reshape its business model before the interest rate downturn cycle arrives.
As a star company in this year's stock market, Circle is indeed worthy of the title. But beneath the halo of the first stablecoin stock, investors need to soberly recognize the challenges it faces. From a single stablecoin issuer to a global digital financial infrastructure provider, this transformation path is full of variables. Whether Circle can continue writing the myth of its stock price rising 10-fold after the IPO remains to be seen.
