Author: @lufeieth
Preface
This is merely a thought experiment for reference only. Welcome to exchange and clash of views. Not investment advice. Profit or loss is your own responsibility.
Valuing Circle (CRCL) is not easy, especially using the Discounted Cash Flow (DCF) model. Key parameters can vary significantly with slight changes. We can only attempt to find some vague correctness under a relatively conservative approach.
Sending the following prompt to ChatGPT and Gemini yields the same numbers.
Prompt:
According to:Circle's EBITDA ≈ USDC Issuance Scale * USD Benchmark Interest Rate * 38% Gross Margin - Annual Fixed Operating Costs.
Specific numbers:
As of December 31, 2025, USDC issuance is calculated based on 70 billion.
If from January 2026, over 10-year period (2026-2035), USDC issuance is assumed to grow at an average annual rate of 15%.
Use the average annual USDC issuance (not the year-end issuance) to calculate interest and EBITDA.
Annual USD benchmark interest rate is assumed to be 2.5%.
Annual fixed operating costs: $500 million for 2025, assumed to increase by 10% annually from 2026 onwards.
Effective tax rate is assumed to be 24%.
PE multiple is assumed to be 20x.
Fully diluted share count is assumed to be 275 million shares.
Discount rate is assumed to be 10%.
Calculate CRCL's free cash flow, enterprise value, and reasonable stock price discounted back to January 2026.
I. Explanation of Parameters Used in the Valuation Model
1. Gross Margin:
Circle's Q3 2025 financial report showed a gross margin of 39.5%. We use 38% for calculation.
Circle names its key operating metric as RLDC in its performance materials. RLDC is defined as Total Revenue and Reserve Income minus Total Distribution, Transaction, and Other Costs.
RLDC Margin is defined as RLDC divided by Total Revenue and Reserve Income.
2. Benchmark Interest Rate:
As of February 2026, the federal funds rate is 3.5-3.75%. The future path is unknown. We assume an average of 2.5% for the next 10 years.
3. Fixed Operating Costs:
The company's 2025 fixed cost guidance is $495-$510 million. We use $500 million, growing at 10% annually. (Reference: VISA, MA fixed cost growth around 10% in 2025).
4.PE
Multiple:
For CRCL, we use a 10-year average PE of 20x. (Reference: VISA, MA average 10-year PE valuation is 27-35x).
5. USDC Issuance:
As of December 31, 2025, USDC issuance was 75.3 billion, but as of February 1, 2026, it was 70.2 billion. We use 70 billion as the base for calculation.
6. Average Annual Growth Rate of USDC Issuance:
This is the largest variable. First calculated at 15%. Later there is a table showing different valuations corresponding to growth rates from 10% to 40%.
7. Effective Tax Rate:
"Income tax expense or benefit" divided by "pre-tax profit", reflecting the comprehensive tax burden level under the current profit structure. Circle's Q2, Q3 2025 reports showed negative values due to tax credits and exemptions, making it un-referenceable. Temporarily use 24%.
8. Fully Diluted Share Count:
Basic Shares: Refers to the "number of issued and outstanding common shares", the total number of shares actually held by shareholders and existing at a specific disclosure point.
As of November 6, 2025, Circle had issued and outstanding Class A: 216,487,160 shares, Class B: 18,988,431 shares, totaling 235,475,591 shares.
Fully Diluted Shares: Based on basic shares, plus currently existing potential dilutive items, a more commonly used metric for per-share valuation, accounting for currently existing potential dilutive instruments. Includes:
1 Shares corresponding to the granted portion of equity incentives: 35,413,000 shares.
2 Shares issuable related to M&A, subject to service period conditions, etc.: 1,744,000 shares.
3 Potential shares from convertible notes: 1,125,000 shares.
4 Potential shares related to warrants: 1,248,000 shares.
Total approximately 275,005,591 shares, or about 275 million shares.
There is also a Maximum Fully Diluted Share Count (stress test口径, including future un-granted incentive pool):
On top of the 275 million shares, add the "future equity incentive pool available for grant" of 31,348,000 shares. Total approximately 306,353,591 shares, or about 306 million shares.
Our model uses the fully diluted share count of 275 million.
Sections II, III, and IV below are the calculation results:
II. Units and Definitions
1. Unit Explanation
(1) All amounts in the table below are in "Hundreds of Millions of USD".
(2) USDC issuance scale uses "Average Balance for the Year", unit is "Hundreds of Millions of USD".
(3) Stock price unit is "USD per share".
2. Calculation Chain
(1) Annual Interest Benchmark Income = Average USDC Balance for the Year × 2.5%
(2) Retained Gross Profit = Interest Benchmark Income × 38%
(3) EBITDA ≈ Retained Gross Profit − Annual Fixed Operating Costs
(4) Taxes = max(EBITDA, 0) × 24%
(5) FCF ≈ EBITDA − Taxes
(6) Discount rate 10%, discounting annual year-end cash flows back to January 2026
(7) Terminal Value at end of 2035 = 2035 FCF × PE 20x
(8) Fully Diluted Shares = 275 million shares
III. Annual Free Cash Flow from 2026 to 2035 (Hundreds of Millions of USD)
Total Present Value of Explicit Period FCF (2026 to 2035) approximately $2.282 Billion.
IV. Enterprise Value and Reasonable Stock Price as of January 2026 (Based on Fully Diluted 275M Shares)
1、Terminal Value at end of 2035
(1) 2035 FCF = $926 Million
(2) Terminal Value = 9.26 × 20 = $18.513 Billion
(3) Present Value of Terminal Value = 185.13 ÷ 1.1^10 = $7.138 Billion
2、Enterprise Value EV (Discounted to January 2026)
(1) EV = Explicit Period PV 2.282 + Terminal Value PV 7.138 = $9.420 Billion
3、Reasonable Stock Price Discounted to January 2026
(1) Per Share Value = $9.420 Billion ÷ 275 million shares = $34.25 per share
4、A Checkpoint
(1) The present value of the terminal value accounts for approximately 75.8%, which means the valuation is highly sensitive to the 38% retention rate, fixed cost path, and terminal multiple.
V. Summary of Results under Different USDC Average Annual Growth Rates (2026–2035 Explicit Period, 2035 Terminal Value at PE=20, 10% Discount)
Explanation:
(1) Under different scenarios of USDC average annual growth rate from 10% to 40% (increasing by 1%), calculate the enterprise value (EV) and reasonable stock price discounted to January 2026.
(2) EV in the table below is the enterprise value discounted to January 2026, Stock Price = EV ÷ 275 million shares (fully diluted shares).
(3) Units: 2035 year-end USDC scale and EV are in Billions USD (B USD), stock price is in USD/share.
In the table above, 20% is highlighted in red. This means: under conservative estimates, if you believe the future average annual growth rate of USDC can reach 20%, then the current CRCL price of $62 (as of 22:00, February 2, 2026, half an hour before opening) might have a slight margin of safety.
Note: Even if there might be a slight margin of safety, it does not mean it won't fall further. And I also hope it will fall further. It might still fall a lot. Because many factors affect short-term stock price fluctuations, such as the
forced sellers' forced selling behavior
. If you use on-exchange leverage, you might even get liquidated to zero. Remember:
"Preserve principal, don't go to zero."
Do not use leverage. Otherwise, the future has nothing to do with you.
VI. Some Explanations
1. The parameters used in the model are relatively conservative,只是想看看在保守估算下合理的估值是多少。大家可以修改具体的数字，发给chatGPT或Gemini直接计算。
2. The model only considers USDC's reserve interest income and does not include other income items. Circle's Q3 2025 financial report showed other income items as $29 million. Because it's difficult to estimate growth, for conservative estimation, the model did not include them.
3. Products mentioned in Circle's 2026 product vision
, such as the Arc chain, CPN network, xReserve, StableFX, etc., and their potential future income are not included in the model and can be regarded as unvalued upside options.
4. The biggest variable and core question affecting the model's valuation becomes:
-
How large do you think the scale of stablecoins, USDC, will be in 5, 10 years? Can the average annual growth rate of USDC reach 20%?
-
Will Circle still be the leading compliant stablecoin? And maintain its share in an environment of increasing regulation and competition?
5. Although the market generally believes that trends like cross-border payments, "dollarization" in the third world, tokenized stocks, on-chain treasuries, RWA, prediction markets, and even AI Agent payments will benefit stablecoins, for investors who need to put real money on the line, cognition and logic are just the starting point.
What truly determines position sizing and the ability to hold on during volatility is the continuous emergence of trackable, verifiable facts and evidence. Conclusions need to be sought and verified by each individual. Only by holding the chain of evidence in your own hands can you have the capability and determination to resist the fluctuations and noise that will inevitably appear in the future.
VII. Appendix Reference: USDC vs USDT Growth Table Past 6 Years (2020–2025)
Explanation
1. Issuance caliber: Circulation量 as of December 31 each year, unit is Hundreds of Millions of USD
2. YoY Growth Rate: Current year-end ÷ Previous year-end − 1
3. Mind Decoding Content: Added according to the original text of the image you sent
4. "Average Annualized Growth Rate" calculated as CAGR (5 annual intervals) from end-2020 to end-2025
For reference only, to have an intuitive perception of the order of magnitude. Does not represent future growth rates.
