Circle's Listing Sparks Profitability Disparities Compared to Tether

The discussion revolves around the upcoming listing of Circle and its relatively low market capitalization, prompting personal interest in investing. Comparison with competitor Tether shows that market caps are similar, with USDC at $61 billion and USDT at $153 billion. However, profit margins differ significantly. Tether's 2024 revenue is projected at $13 billion with a net profit of $5.2 billion, whereas Circle's revenue is only about a seventh of Tether's at $1.7 billion, and net profit is $156 million, approximately a thirty-third of Tether's. The perception that stablecoins are highly profitable, often highlighted as outperforming BlackRock, mainly pertains to Tether, highlighting a stark gap with Circle. Contract terms between Circle and Coinbase also impact profitability: Coinbase takes 50% of Circle's net profit, and the platform retains 100% of USDC profits, including interest income from USDC stored on Coinbase. The feasibility of such contracts correlates with Coinbase holding 20% of all USDC. The revenue and profit discrepancy are primarily due to Tether's lack of regulation, allowing investment in diverse assets like US Treasuries, gold, and Bitcoin, while Circle focuses solely on US Treasuries. Additionally, Circle's user base is mainly in the US and Europe, whereas Tether benefits from demand across Asia, Latin America, and Africa, leading to higher demand and usage. Further detailed analysis is limited by available information, but this summary encapsulates the key points observed.