Friends around me have already started to learn about stablecoins through Circle.

After Circle went public, its stock price skyrocketed from $31 at issuance to over $200, attracting a lot of attention to stablecoins.

The market's recognition of Circle reflects Wall Street's emphasis on stablecoins, and the main reason is that stablecoin-related assets are very scarce.

If you want to understand stablecoins, you need to first understand how Circle got to where it is now: How did Circle make it this far?

Overall, Circle’s development history can be described as a series of ups and downs, going through three major stages:

The first stage was in 2013 when Circle was founded in Boston, USA, initially positioning itself as a Bitcoin payment service, similar to "Bitcoin Alipay."

The product was named "Circle Pay."

The second stage was in 2018 when Circle had transformed into a very diversified company.

At this time, Circle had three major business lines: the cryptocurrency trading platform Poloniex, over-the-counter trading (OTC), and the original payment service Circle Pay.

The third stage was in 2019 when Circle shut down all three main business lines, retaining only the stablecoin business USDC.

What happened in these stages? Why did these transitions occur?

We can dive in together and explore in detail.



1. From Bitcoin payments to diversified business layout

First, in the first stage, around 2013, Bitcoin was highly volatile, with prices often soaring and plummeting, making it unsuitable as a stable payment medium.

By 2017, the cryptocurrency market entered a bull market, with Bitcoin's price rising to nearly $20,000, and other cryptocurrencies like Ethereum also rapidly emerging.

The ICO (Initial Coin Offering) boom and surge in blockchain projects drove demand for exchanges and trading services.

Circle also entered the exchange business accordingly. In 2017, Circle acquired the US compliant exchange Poloniex for about $400 million. @Poloniex

At that time, Poloniex held about 60% market share in the US, making it the top-ranked exchange, which became the core of Circle's business.

With such an exchange, Circle expanded its OTC services, which is actually the over-the-counter trading business, helping institutions facilitate large off-exchange cryptocurrency transactions.

Thus, Circle formed three major business lines: exchange, OTC, and payment services.

2. From diversified business to stablecoins

However, good times didn’t last long. From 2018 to 2019, the cryptocurrency market experienced a very bleak crypto winter.

Before Circle acquired Poloniex, Poloniex's market share in US compliant exchanges was around 60%.

However, by the second half of 2019, Poloniex's market share in the entire US compliant exchanges was less than 1%.

At that time, the entire US crypto market was also in a sensitive policy period, where many trading pairs believed to have securities implications were delisted, making trading business extremely difficult, and Circle was on the brink of bankruptcy.

In 2018, Circle raised $3 billion, but by 2019, the valuation in the secondary market was only around $700-$800 million.

There were opportunities amidst the crisis.

In 2017, the Chinese government issued the 94 ban, suspending the operations of all Chinese exchanges, leading to a surge of offshore exchanges in the market.

Offshore exchanges became the main trading venues for cryptocurrencies, and at this time, the stablecoin issued by USDT became a particularly popular product among these exchanges.

A large number of trading pairs changed from direct trading between fiat currency and cryptocurrencies to direct trading between the USDT stablecoin and cryptocurrencies.

The stablecoin business saw its first real growth from Tether's launch in 2014 to 2017. @Tether_to

Thus, all parties with resources were eager to explore the stablecoin business, making stablecoins a very hot business for the first time.

Although all offshore exchanges were using USDT, there was a lack of a compliant stablecoin.

Circle also saw this track, believing it could occupy a niche while promoting some of their other businesses, and decided to create USDC.

However, USDC is merely a product issued by a joint venture between Circle and Coinbase, while its main business line at that time was still the cryptocurrency trading platform Poloniex.

Therefore, entering the crypto winter from 2018 to 2019, the stablecoin USDC, as a marginal business, became Circle's only growing business.

As a result, Circle made a very important move: selling Poloniex to Justin Sun while divesting all other businesses, retaining only USDC-related operations.

At this point, Circle entered the third stage: focusing on stablecoins.

3. A complete shift to stablecoin business

When Circle and Coinbase established the joint venture Center as the issuer of USDC, both companies basically held 50% of Center's equity and control, sharing responsibilities for USDC's issuance and governance.

However, strictly speaking, over the past few years, Circle has been the main driver in promoting and operating USDC, as Coinbase's main business remained as an exchange.

By the second half of 2023, Coinbase and Circle shut down the joint venture Center, transferring all control and governance rights of issuance to Circle, essentially giving Circle full responsibility for USDC's operation.

After the previous round of DeFi Summer and the subsequent resurgence of Solana, USDC experienced a period of rapid growth.

Now, with the implementation of crypto-friendly policies following Trump's presidency, USDC is again experiencing rapid growth, with an 80% increase in the past year.

Circle also took the opportunity to go public, becoming the first compliant stablecoin in the US stock market, creating a strong demonstration effect and benchmark effect.

In summary

No company’s development goes smoothly; even Circle, the leader in compliant stablecoins, has experienced ups and downs and was even close to bankruptcy before.

What did Circle do right?

Firstly, Circle was able to keenly capture potential market trends, laying out stablecoin business ahead of time while the exchange business was thriving.

While it can be said that Circle does whatever is popular, it also moved forward with market trends, seizing a glimmer of opportunity in a crisis and rising again.

There are no companies that remain evergreen; only those that perceive market development trends and respond quickly to the market can sustain longer.

Many large platforms/tracks/trends develop from a single point, expanding from point to area, eventually becoming scaled.

Therefore, it is essential to find a specific scenario, a clear user category, serve this group well, and validate the feasibility of one's business logic, leading to unlimited possibilities in the future.

Let’s encourage each other.