Original title: The Full Circle: How USDC Supply Curve Shapes its Valuation
Original source: Alkimiya
Original translation: TechFlow
An accurate estimate of intrinsic value is the foundation of stable, rational, and potentially profitable investing.
—Howard Marks
introduction
Circle’s landmark listing on the public markets highlights the growing institutional demand for regulated crypto infrastructure. However, the sustainability of its valuation relies on the expansion of its core revenue engine, which is closely tied to the total supply of USDC.
This article aims to move from narrative to data measurement. More than 95% of Circles revenue comes from channels related to USDC, which makes it highly sensitive to short-term interest rates and the total circulation of USDC. We first structurally decompose the supply curve of USDC, analyzing changes in chain-level concentration, relative capital liquidity, and inflection points in specific market environments to identify the variables that best drive minting activity.
We then introduce a recalibrated auto-regressive model that can forecast weekly supply with an error margin of approximately ± 1.5% and convert incremental expansion directly into EBITDA sensitivity.
Finally, we concluded by showing how this supply indicator can be used as a real-time tradable signal, providing market participants with a real-time proxy for Circle fundamental dynamics.
Circle Valuation Structure Analysis
Based on a market capitalization of $58.2 billion, Circles price-to-earnings (P/E) multiple is nearly 8 times higher than Visas (Visas P/E ratio is about 15 times). The firm investment of high-profile institutions such as ARK Invest and BlackRock shows that investors are not only pricing in current fundamentals, but also betting on its potential to achieve mass adoption in the future.
Circle’s Valuation Metrics Stock Symbol Screen - Data Source: Yahoo Finance
In order to maintain its current valuation, Circle must continue to demonstrate a strong profit growth trajectory. Historically, more than 95% of Circles revenue comes from interest and dividends generated by its stablecoin fiat asset reserves (such as bank cash, short-term U.S. Treasury bonds, and the Circle Reserve Fund managed by BlackRock). Therefore, its revenue is highly sensitive to short-term interest rates and the circulation of USDC.
Data source: SEC
EBITDA sensitivity breakdown
in:
Net interest margin (NIM): Interest income earned from income-earning assets, such as U.S. Treasury bonds.
Supply flow-based fees: Fees generated through USDC minting and redemption.
With net interest margins (NIMs) set to compress as the Fed’s rate cuts loom, the market is pricing in a shift where volume-based revenue growth will outpace the impact of rate compression.
This growth relies on the continued adoption of USDC as a global payment network, whose fee capture capabilities will expand with the speed of use, cross-border fund flows, and ecosystem integration. Therefore, it is critical to study the supply dynamics of USDC. This is not only a leading indicator of Circles future revenue streams, but also a core anchor for its valuation, providing real-time insights into the development of its business model.
Stablecoin supply dynamics analysis
Currently, the total supply of stablecoins has climbed to $251 billion, a record high, up 34% from the peak of the previous cycle in 2021 at $187 billion. This growth reflects significant capital inflows and a recovery in confidence in the crypto ecosystem.
Total historical supply of stablecoins-Data source: DefiLlama
Currently, USDT and USDC account for more than 86% of the total stablecoin supply. Among them, USDT leads with a market share of 62.1%, followed by USDC with 24.2%. Both stablecoins play a fundamental role in different ecosystems, especially USDC, whose development trajectory provides us with a more transparent perspective to observe regulated, institutional-level demand.
To understand how supply behaves during market cycles, we start with a simple supply flow formula:
in:
ΔSt: Net change in total stablecoin supply
Mt: Minting amount (fiat currency → stablecoin)
Rt: Redemption amount (stablecoin → fiat currency)
Translation: TechFlow
This dynamic reveals the core logic of stablecoin supply:
Expansion: Supply increases when mints exceed redemptions.
Contraction: When redemptions exceed minting, supply decreases.
By observing the history of USDC through the lens of expansion and contraction, we can see that changes in its supply are closely tied to important inflection points in the overall crypto timeline.
USDC circulating supply - Data source: Glassnode
Translation: TechFlow
Accelerated expansion (2025 and beyond)
With Circle’s listing, USDC’s current circulating supply has reached an all-time high of $61.2 billion. This scale reflects USDC’s evolution from a simple transactional stablecoin to a recognized core financial primitive. Since 2021:
Average daily trading volume increased 406%, jumping from $7.77 billion to $31.52 billion.
Daily active users have grown rapidly at a compound annual growth rate (CAGR) of 142.92% since 2020, reflecting its rapid popularity in major ecosystems.
Circle USDC Indicators - Data Source: Artemisxyz
USDC’s growth is driven primarily by three forces:
1. The resurgence of DeFi: There has been a renewed surge in interest and engagement among crypto-native user groups.
2. Traditional Finance (TradFi) adoption: Gradually being accepted by a wider traditional financial audience in the areas of settlement, cash management and fund allocation.
3. Strategic cooperation with Coinbase: By cooperating with Coinbase, one of the worlds largest crypto user bases, USDC gains unparalleled distribution advantages in retail, institutional, and on-chain ecosystems.
Capital efficiency reveals true value
Looking at the supply alone is not enough to reflect the actual utility of stablecoins. More importantly, the actual value of stablecoins lies in the efficiency of their fund flow.
Stablecoin transaction volume comparison-data source: Artemisxyz
On the Binance platform, USDT dominates with a supply of $18.9 billion, while USDC’s supply is only $5.81 billion, about one-third of USDT.
However, in terms of trading volume, the gap has almost disappeared. In the past 30 days, USDTs trading volume was $44.8 billion, while USDC reached $38.7 billion, lagging behind by only 13.6%.
By calculating funding velocity (i.e. 30-day volume divided by circulating supply), we can quantify capital efficiency:
Applicable to USDT and USDC:
Data source: DefiLlama, Visaonchain
The results show that USDC’s funding velocity is 2.81 times that of USDT, which means that each dollar of USDC is traded almost three times as often as USDT. This means that USDC’s funding flows faster, has higher utility, and exhibits deeper on-chain value.
Chain Growth: Expanding to Alt-VM and Layer 2
USDC on-chain supply distribution - data source: Artemisxyz
USDCs supply growth is gradually shifting from Ethereum-centric to a broader ecosystem, including Solana, Ethereum Layer 2, and emerging Alt-VM chains.
Current Circle USDC supply details - Source: Artemisxyz
Data shows that USDC supply is increasingly distributed across a diverse ecosystem, aligning with areas where liquidity, settlement needs, and on-chain utility are expanding fastest.
USDC Dominance on Solana
Solana on-chain USDC historical transaction volume - data source: Artemisxyz
USDC accounts for 99.5% of stablecoin volume on Solana in May 2024. Even as ecosystem activity dispersed somewhat in December, USDC still maintained a 96% market share.
Arbitrum Flippening
USDC supply changes on ArbitrumOne - Data source: Artemisxyz
In September 2024, USDC quietly surpassed USDT on Arbitrum to become the dominant stablecoin. At its peak, the supply ratio of USDT to USDC was 2.03 (i.e. Tether had more than twice the supply of USDC). Today, this ratio has dropped to 0.2.
The driving force behind Hyperliquid Bridge-Data source: DefiLlama
This reversal is mainly due to the explosive growth of Hyperliquid, whose total locked value (TVL) soared from US$600 million in the fourth quarter of 2024 to US$2.5 billion at the end of the first quarter of 2025, an increase of 417%. As of now, Hyperliquids bridge deposits have reached a record high of US$3.62 billion, an increase of 601% compared to the fourth quarter base.
This change reflects the unique structural fit between the Arbitrum core ecosystem and its extended integrations, setting the stage for a stablecoin-led trend.
USDC Supply Curve Quantitative Model: Capturing Stablecoin Supply Dynamics
Given the importance of USDC supply dynamics, we built an autoregressive model (AR model) to predict the total supply of USDC. We chose the AR model because of its simplicity, transparency, and good performance in the local linear growth model of the USDC supply curve.
Data source: Internal model
The model is recalibrated every 90 days to capture the latest market trends while ensuring that the number of samples used for regression and matrix calculations is robust enough. Each forecast period has a dedicated model, trained on a 90-day sliding window (7 independent regression models, each with a unique set of beta coefficients). The model uses moving averages (1 day, 3 days, 7 days, 14 days, and 30 days) as feature variables to predict the next n-day average of USDC supply, where n ranges from 1 to 7. The regression constant is set to zero to ensure that the model is completely signal-driven.
This approach has been very effective in predicting short-term directional changes in supply. Since 2022, the models 7-day average USDC total supply has an 80% probability of falling within ± 1.5% of the predicted result.
Data source: Internal model
Conclusion
Circles listing marks an important turning point for the crypto industry. This is not just a capital raise, but also demonstrates the previously unmet market demand for stablecoins in the public market. Its performance highlights the deep interest of investors in compliant digital dollar infrastructure and further consolidates Circles position as the most clear public representative of this emerging asset class.
Currently valued at $58.2 billion, Circle has become the gateway for institutions to enter the regulated digital liquidity space, and USDC is at the core of this ecosystem. As USDC becomes more deeply embedded in the expanding DeFi ecosystem and the traditional financial system, its role is changing. It is no longer just a reflection of adoption, but has become a real-time global liquidity barometer that reflects capital flows, risk sentiment, and market positioning. Until now, the only way to bet on this growth has been to trade Circles stock, but stock-specific factors often obscure the underlying dynamics.
