Studying Circle through the 'Winner Pattern': What Historical Winners Should CRCL Investors Look To for Answers?

Author: @lufeieth

Introduction

Circle is a company that is difficult to explain with a single comparable firm.

If viewed as a stablecoin issuer, it is closest to Tether; if seen as a global payment network, its goals align more with Visa and Mastercard; if considered as a settlement infrastructure for financial institutions, it shares similarities with SWIFT, DTCC, and CLS; if regarded as a developer platform, it is learning from Stripe, AWS, and Twilio. Given that USDC operates on an open blockchain, Circle must also address a long-standing question faced by Red Hat: how can a company continue to capture commercial value when the underlying network remains open?

Therefore, when studying Circle, the most effective question is not "Which company is Circle most like?" but rather:

What winner patterns correspond to each layer of Circle's business? Does it possess the key success factors that these historical winners had?

This is where the Winner Pattern Study can play a role.

I. What is Winner Pattern Study?

In 2022, Xu Xin, founder of Today Capital, reflected on an important lesson from her investment career during an alumni interview at Nanjing University: when researching a single company, investors can easily fall in love with it, ultimately falling into the trap of "seeing the trees but not the forest."

To address this issue, she summarized a three-part research methodology:

1. Study the rules of winners to understand what great companies look like.
2. Deeply understand consumers and users.
3. Research the major companies in the industry one by one to build a complete industry map.

The first part is the Winner Pattern Study.

Xu Xin's approach to studying winners is not simply reading a few business stories. Using the retail industry as an example, her research team systematically read biographies, historical materials, and annual reports of companies like Amazon, Walmart, Costco, 7 Eleven, Aldi, and Walgreens. The research also included founder speeches, quarterly earnings calls, and strategic changes, focusing on understanding how winners are formed step by step.
(Sina Finance)

Thus, Winner Pattern Study can be summarized as a research chain:

Historical winner samples → Key success factors → Causal mechanisms → Current company comparisons → Verifiable metrics

Its purpose is to establish a causal map of the industry, avoiding judgments based solely on company narratives, short-term data, or superficial analogies.

II. Six Core Points of Winner Pattern Study

1. Study the historical processes of winners

Studying a mature company statically often reveals its brand, scale, profit margins, and network effects, but misses the sequence of how these results were achieved.

What needs to be studied is:

• What problem did it initially solve?
• Who was the first core user group?
• How did it achieve a cold start in the early days?
• What flywheel emerged as it scaled?
• When did the company gain pricing power?
• How did the revenue structure expand from a single business to multiple layers of fees?
• Why were competitors unable to replicate it?

Winner patterns exist in the development path, not in the final financial statements.

Today, Visa has a global network, brand, standards, and risk control capabilities, but these capabilities have undergone a long evolution through authorization, clearing, settlement, cross-border connections, and value-added services. VisaNet established electronic authorization and clearing systems in the 1970s, then continuously expanded into multi-currency processing, risk control, e-commerce, and value-added services.

2. Study underlying mechanisms to avoid staying at industry labels

Just because two companies are in payments does not mean they have the same business model.

Visa's core asset is the network connecting banks, merchants, acquirers, and consumers; Stripe's core capability is reducing the development difficulty for businesses to access financial infrastructure; SWIFT controls financial messaging and communication standards; Tether's advantages mainly come from liquidity, trading pair coverage, and global dollar distribution.

Therefore, when studying Winner Patterns, one should distill causal mechanisms:

• What drives growth?
• What is the basic unit of network effects?
• Who holds user relationships?
• Who controls standards and interfaces?
• Which layer has the right to charge fees?
• Where does value flow to among ecosystem participants?

3. Study both winners and companies that were 'almost successful'

Only studying winners can lead to survivor bias.

When researching Visa, one should also study Diners Club, Discover, and regional payment networks; when studying AWS, one should also examine early cloud computing competitors; when studying USDT, one should also look at BUSD, DAI, PYUSD, and other stablecoins that have not reached the same scale.

A more rigorous approach is to configure three types of samples for each Winner Pattern:

1. Final winners.
2. Long-term second place.
3. Companies with similar conditions that ultimately failed.

The differences among these three are often more valuable than the commonalities among winners.

4. Distinguish between industry victory and company victory

An industry can grow rapidly, yet some companies within it may still fail to generate excess returns.

The growth of stablecoin volume does not automatically mean Circle's profits will grow in tandem. The growth value of USDC may be shared among exchanges, wallets, public chains, banks, payment service providers, and distribution channels.

Therefore, investors must separately answer two questions:

1. Can the USDC network succeed?
2. Can Circle shareholders obtain a sufficiently high share of network value?

Widespread adoption of infrastructure and the pricing power of infrastructure owners are two independent verification processes.

5. Transform patterns into falsifiable metrics

Winner Patterns cannot remain at the narrative level.

Each analogy must be transformed into trackable data, such as:

• Number and activity of network participants
• User retention rates and transaction frequency
• Number of developers and applications in production environments
• Ratio of direct customers to channel customers
• Revenue per transaction
• Non-interest income ratio
• Channel sharing ratio
• Customer concentration
• Product cross-usage rate

When these metrics cannot improve over the long term, the relevant winner pattern should be downgraded.

6. Separate business model research from valuation

Even if Circle possesses some early characteristics of historical winners, its stock price may have already priced in a large amount of success expectations.

Winner Patterns answer:

What kind of company could Circle grow into?

Valuation analysis answers:

How much probability of success is already factored into the current market value?

Only by combining the two can a complete investment judgment be formed.

III. How to Apply Winner Pattern Study in Practice

When studying each historical winner, one can uniformly answer seven questions.

1. Initial Entry Point

What strong pain point did the company initially solve?

Why were users willing to switch?

Was this entry point sufficient to support early scale expansion?

2. Cold Start Method

Where did the first batch of suppliers and demand come from?

Did the company achieve a cold start through subsidies, partnerships, regulatory support, or existing channels?

3. Growth Flywheel

Will new users enhance the value of existing users?

Do more transactions bring better liquidity, lower costs, higher security, or broader coverage?

4. Control Points

What key resources does the company control?

Common control points include:

• Standards
• Protocols
• Brands
• User entry points
• Data
• Liquidity
• Compliance qualifications
• Developer interfaces
• Clearing and settlement systems

5. Charging Points

At which layer does the company ultimately charge fees?

Are fees based on transaction volume, asset size, API call volume, subscriptions, value-added services, or reserve asset returns?

6. Value Leakage

Which partners have strong bargaining power?

How much value will channels, suppliers, regulators, and infrastructure providers take away?

7. Conditions for Failure

How might technological substitution, regulatory changes, competition, channel backlash, or product homogenization disrupt the winner pattern?

Research on Circle should also follow these seven questions, rather than first determining a conclusion like "the next Visa" and then seeking supporting evidence.

IV. Define the Competition Circle is Engaging In Before Studying Circle

Circle currently positions itself as a full-stack platform for internet financial systems. Its products cover multiple layers including USDC, EURC, Circle Payments Network, CCTP, Gateway, wallets, developer tools, and Arc. Circle aims to provide digital assets, cross-chain liquidity, payment networks, developer infrastructure, and settlement coordination capabilities simultaneously.

As of the end of Q1 2026, the circulation of USDC reached $77 billion; the activity volume disclosed by Circle for CPN corresponds to an annual trading scale of $8.3 billion over the past 30 days. CPN Managed Payments allows financial institutions to provide stablecoin payments without directly managing digital assets.

From this, it can be seen that Circle is attempting to complete three strategic leaps:

First Leap: From Stablecoin Product to Default Digital Dollar Asset

Users no longer view USDC as one of many stablecoins but as the default dollar asset in transactions, payments, collateral, and settlements.

Second Leap: From Digital Asset to Financial Network Standard

Financial institutions, trading platforms, payment service providers, and developers form stable interfaces, liquidity, and business processes around USDC.

Third Leap: From Network Standard to Chargeable Control Layer

Circle continues to charge fees through payment networks, cross-chain services, wallets, compliance, liquidity, custody, developer tools, and management services.

The long-term investment return of CRCL ultimately depends on whether Circle can complete the third leap.

V. Seven Types of Winner Patterns CRCL Investors Should Focus On

First Type: The Global Digital Dollar Distribution Model of USDT

Why Study This

USDT is the most direct historical sample when researching stablecoin demand, liquidity, and distribution networks.

Tether has long emphasized two core scenarios:

1. 24-hour dollar liquidity in the cryptocurrency trading market.
2. Demand for dollar storage and cross-border transfer from users in emerging markets.

Tether publicly states that its strategic focus has long been on emerging markets and regions with insufficient coverage of traditional dollar financial infrastructure.

What to Research

• How did USDT become the default pricing asset for exchanges?
• How do trading pairs and liquidity form a self-reinforcing cycle?
• How do low-cost networks like Tron drive distribution?
• Why do users in emerging markets assign different weights to compliance transparency and convenience?
• What roles did exchanges, market makers, and wallets play in the cold start?
• Once network leadership is established, why is it difficult for newcomers to replace it?

Core Questions for Circle

USDC primarily relies on regulatory compliance, institutional partnerships, and on-chain finance for growth, while USDT mainly relies on global distribution, trading liquidity, and dollar availability for its advantages.

CRCL investors need to assess:

Can USDC's compliance advantage be transformed into a sufficiently strong liquidity advantage and usage habit?

Key tracking areas include:

• USDC's share in transactions, payments, collateral, and RWA

• Growth of USDC balances outside of Coinbase

• Actual usage in non-U.S. regions

• Liquidity depth across different public chains

• Growth of direct USDC holders and active addresses

• Institutional settlement volume versus retail usage

Category Two: Open Payment Network Models of Visa and Mastercard

Why Study This

Visa is one of the most important Winner Patterns in Circle's construction of a global payment and settlement network.

Visa does not bear most consumer credit risk and does not directly manage the majority of merchant relationships. Banks, acquirers, and payment service providers are responsible for distribution, while Visa controls network standards, transaction processing, rules, branding, and risk management infrastructure.

VisaNet has gradually expanded from electronic authorization and clearing systems to cross-border processing, mobile payments, risk control, and value-added information services, forming a multi-layered charging capability.

What Needs to Be Studied

• How Visa completes cold starts on both the bank and merchant sides

• Why financial institutions are willing to join the shared network

• How network rules reduce trust costs among participants

• How Visa expands from basic processing revenue to value-added services

• How standards, branding, risk control, and global coverage create entry barriers

• How Visa shares economic benefits with banks that have customer relationships

Core Questions for Circle

Can CPN form a similar network of financial institutions?

Key Tracking Areas:

• Number of active Originating Financial Institutions and Beneficiary Financial Institutions

• Number of actual payment corridors opened

• Repeat transaction rate of individual institutions

• CPN transaction volume and revenue growth

• Whether CPN establishes a clear charging mechanism

• Whether banks and payment companies expand usage scenarios after accessing CPN

• Whether CPN can extend from payment services to risk control, foreign exchange, liquidity, and compliance services

For CRCL, the growth of CPN scale is just the first step. Unit transaction revenue, customer retention, and adoption of value-added services will determine whether it can gradually exhibit Visa-like economic characteristics.

Category Three: Public Infrastructure Models of Financial Markets by SWIFT, DTCC, and CLS

Why Study This

Circle's development path in the institutional market has significant similarities with traditional financial market infrastructures.

SWIFT connects global financial institutions through a unified financial messaging standard. It is currently a cooperative organization owned by its members, connecting over 11,000 banks, financial institutions, and enterprises.

DTCC has become the core post-trade infrastructure of the U.S. capital markets through automation, centralization, and standardization, processing large-scale securities transactions daily.

The moats of these institutions mainly come from:

• Unified standards

• Institutional connection density

• Compliance credibility

• System reliability

• Process embedding

• High switching costs

What Needs to Be Studied

• How the financial industry forms common standards

• Why neutral governance is beneficial for institutional participation

• How infrastructure embeds into internal bank processes

• How reliability, compliance, and governance translate into moats

• How regulatory recognition increases entry barriers

• How industry utilities maintain low rates and long-term stable income

Core Questions for Circle

Can Circle become a trusted digital cash coordination layer for banks and capital market institutions?

Key Tracking Areas:

• Direct access of globally systemically important banks

• Degree of USDC's entry into custody, clearing, trading, and collateral systems

• Whether banks incorporate USDC into daily product processes

• Stability, redemption capability, and compliance record of Circle's system

• Whether CPN and CCTP gradually form factual standards

• Whether institutions are willing to rely on a commercial company for key settlement infrastructure

There is a key difference between Circle and SWIFT, DTCC: SWIFT and DTCC have strong industry utility and member governance attributes, while Circle is a commercial company pursuing shareholder returns.

This means Circle must establish a balance between neutrality, openness, and shareholder value capture.

Category Four: Developer Infrastructure Models of Stripe, AWS, and Twilio

Why Study This

Whether Circle can form a high-profit platform business in the future largely depends on whether developers are willing to adopt it as their default financial infrastructure.

Stripe encapsulates complex payment and financial processes into modules that developers can directly call through a unified API, SDK, testing environment, documentation, and development tools. Stripe's current API covers payments, subscriptions, payouts, and financial workflows.

AWS has expanded from basic components like S3 and EC2 to include databases, networking, security, computing, and development tools, gradually evolving from single-point services to a complete cloud platform. S3 was launched in 2006, and since then, AWS has continuously added numerous foundational components and adjacent products.

What Needs to Be Studied

• What is the biggest friction when developers access a new infrastructure?

• How do documentation, SDKs, sandboxes, and debugging tools lower access costs?

• How does a single API expand into a product matrix?

• How does usage-based charging naturally expand with customer growth?

• How do products form cross-selling opportunities?

• How does the developer ecosystem enhance customer retention and switching costs?

Core Questions for Circle

Can Circle's CCTP, Gateway, wallet, contract tools, and Arc become the default financial components called by developers?

Key Tracking Areas:

• Number of developers and applications in production environments

• API call volume

• Developer retention

• Number of Circle products used by individual customers

• Conversion rate from testing environment to production environment

• Developer revenue and other non-reserve income

• Degree of third-party applications' reliance on Circle's infrastructure

The success of Arc should also be evaluated within this framework.

The metrics for measuring Arc should not be limited to on-chain TVL or token prices, but should also observe whether it reduces the overall friction for developers using USDC, CPN, Gateway, and other Circle products.

Category Five: Red Hat's Open Infrastructure Commercialization Model

Why Study This

USDC operates on an open blockchain, allowing users to hold and transfer USDC without continuously paying fees to Circle.

This means Circle cannot fully rely on a closed platform charging model. It needs to establish a service layer around open assets that enterprises are willing to pay for.

Red Hat's success provides an important reference. The underlying open-source software is freely available, and Red Hat generates subscription revenue through tested and certified software, stability, security updates, lifecycle management, technical support, and enterprise services.

What Needs to Be Studied

• Which parts of open technology are easy to commercialize?

• What are enterprises willing to pay for?

• How do security, stability, service level agreements, and compliance form charging capabilities?

• How do community ecosystems coexist with commercial products?

• How can companies establish control points without compromising openness?

Core Questions for Circle

Can Circle build a high-value enterprise service layer around USDC?

Potential charging points include:

• Enterprise-grade wallets

• Payment management

• Compliance and identity verification

• Liquidity management

• Cross-chain coordination

• Foreign exchange services

• APIs and development tools

• Service level agreements

• Institutional-level technical support

• Tokenized asset management

Key Tracking Areas:

• Growth of non-reserve income

• Enterprise customer payment rates

• Revenue from managed payment services

• Software and service gross margins

• Proportion of customers using multiple Circle products

• Whether Circle can establish unique services on an open network

Category Six: Value Distribution Models Between Network Owners and Distribution Channels

Why Study This

This is the Winner Pattern that CRCL investors are most likely to overlook, yet it directly impacts profitability.

The growth of USDC requires participation from exchanges, wallets, public chains, banks, and fintech companies for distribution. These partners can expand network scale but may also gain significant bargaining power.

Circle paid approximately $1.4 billion in distribution costs to Coinbase in 2025. The company also indicated that as reserve income grows and new distributors and approved participants are added, future distribution costs may continue to rise.

This indicates that there is an important distribution mechanism between the scale of USDC and Circle's shareholder profits.

What Needs to Be Studied

• How does Visa distribute network value among issuing banks and acquirers?

• How does the platform gradually reduce dependence on a single channel?

• How do network owners establish direct customer relationships?

• Can multi-channel competition reduce channel bargaining power?

• Which control points must remain in the hands of network owners?

• Are channel contributions and revenue sharing aligned?

Core Questions for Circle

Key Tracking Areas:

• Proportion of USDC balances related to Coinbase

• Proportion of Coinbase distribution fees to reserve income

• Costs of other distribution channels

• Number of direct institutional clients for Circle

• Proportion of USDC directly minted and redeemed

• Channel diversification among banks, payment companies, and enterprise clients

• Whether distribution cost rates decrease with scale

• Whether Circle has the ability to renegotiate commercial terms

The rise in USDC share, coupled with the simultaneous increase in distribution cost rates, may lead to a stronger network but limited improvement in shareholder economics.

Therefore, distribution cost rates should be placed on equal footing with USDC circulation volume, market share, and on-chain transaction volume.

Category Seven: Transformation Patterns Between Reserve Income and Platform Revenue

Circle currently remains highly dependent on reserve income, thus interest rates, USDC scale, and distribution costs collectively determine short-term profitability.

Circle's 2025 annual report shows that other income has begun to come from integrated services, blockchain rewards, redemption fees, tokenized fund management fees, etc., but current reserve income and distribution costs remain core variables of the business model.

CRCL investors need to study companies that generate income based on customer funds, asset scale, or financial balances, focusing on understanding:

• Profit elasticity during rising interest rate phases

• Profit pressure during falling interest rate phases

• Relationship between scale growth and net yield

• Impact of channel sharing on net interest margin

• How to transition from asset balance income to transaction fees, software fees, and service fees

• How to maintain profit growth in a normalized interest rate environment

Key Tracking Areas:

• Average circulation volume of USDC

• Yield on reserve assets

• Proportion of distribution costs to reserve income

• Profit under standardized interest rates

• Proportion of other income

• Revenue contributions from CPN, Gateway, wallet, Arc, and tokenized funds

• Gross margins of non-reserve businesses

The continued enhancement of CRCL valuation largely depends on when the market begins to redefine Circle from an interest rate-sensitive stablecoin issuer to a financial infrastructure platform with multi-layered charging capabilities.

VI. Research Priorities for CRCL Investors' Winner Patterns

If ranked by importance, I recommend prioritizing the following cases.

First Priority: Visa

Resolving the two most important issues for Circle:

1. How network effects are formed.

2. How network value is converted into chargeable income for shareholders.

Focus on VisaNet, banking governance, fee structures, value-added services, and global expansion.

Second Priority: Tether
Addressing whether USDC can become the default digital dollar.
Focus on liquidity, trading pairs, emerging markets, chain selection, exchange distribution, and user habits.

Third Priority: Stripe
Addressing how Circle can transform complex financial infrastructure into developer products.
Focus on APIs, SDKs, documentation, product expansion, and developer distribution.

Fourth Priority: SWIFT
Addressing issues of financial institution networks, unified standards, governance, and neutrality.
Focus on banking participation motives, communication standards, compliance, and global connectivity.

Fifth Priority: Red Hat
Addressing how open networks can achieve commercial value capture.
Focus on enterprise services, subscriptions, security, authentication, and technical support.

Sixth Priority: DTCC and CLS
Addressing issues of institutional-level clearing, settlement, collateral, and systemic infrastructure.

Seventh Priority: AWS
Addressing whether Circle can gradually expand from a core product to a full-stack platform.

Final Research Framework: Can Circle Achieve Three Leapfrogs?

After completing the above Winner Pattern Study, CRCL investors ultimately need to answer three questions.

First, can USDC become the default digital dollar asset?
Mainly referencing Tether.
Key verification focuses on liquidity, usage habits, distribution networks, and cross-scenario adoption.

Second, can USDC become the financial network standard?
Mainly referencing Visa, SWIFT, DTCC, and CLS.
Key verification focuses on financial institution connectivity, network density, process embedding, reliability, and standard control.

Third, can Circle become the charging layer in the network?
Mainly referencing Visa, Stripe, AWS, and Red Hat.
Key verification focuses on pricing power, enterprise services, developer platforms, value-added income, channel bargaining power, and non-reserve income.

Among these three questions, the third question is the most important for CRCL shareholders.

USDC can become a very successful digital asset, while exchanges, public chains, wallets, banks, and users collectively capture most of the economic value. Only when Circle controls sufficiently important points and establishes a sustainable charging capability in payments, settlements, compliance, liquidity, and developer infrastructure will the network success of USDC fully translate into shareholder returns for CRCL.

Conclusion

The value of the Winner Pattern Study lies in helping investors extract mechanisms from history while remaining vigilant about real-world differences.

When studying Circle, the most dangerous approach is to seek a grand analogy and then fit Circle entirely into it. Circle does not have a single historical template; it occupies a crossroad of multiple winning patterns:

• USDT provides a digital dollar distribution model
• Visa provides a payment network and charging model
• SWIFT and DTCC provide a financial infrastructure model
• Stripe and AWS provide a developer platform model
• Red Hat provides an open network commercialization model
• The relationship between Circle and Coinbase reveals issues of channel bargaining and value distribution

What truly determines the long-term value of CRCL will be whether these models can simultaneously exist within Circle and how much economic value created by the USDC network Circle can ultimately retain.

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