Analysis: 98% of Circle's Revenue Comes from Reserve Asset Income, Facing Potential Market Competition from Large Institutions

According to a report by Jinse Finance, after stablecoin issuer Circle went public in the U.S., its profit model was disclosed, showing that 98% of the company's revenue last year came from investment returns on reserve assets. Typically, reserves need to be high-quality, short-term, and highly liquid assets, but data provided by Circle shows that the yield on its reserve assets over the past three years ranged from 0.14% to 5.17%, indicating that its current revenue drivers are quite focused on the interest rate trends of short-term debt and similar assets. Additionally, Circle faces a potential market competition risk: if sovereign-level institutions participate in the issuance of stablecoins in the future, they may quickly gain a certain market share by leveraging the advantage of "zero counterparty risk." Analysts believe that Circle needs to expand its crypto ecosystem.