Circle IPO Diverges from the Spirit of Encryption, Sparking Controversy

Recently, USDC stablecoin issuer Circle completed its initial public offering ( IPO ), but its allocation method has sparked widespread controversy within the encryption community. Industry insiders have pointed out that Circle tends to favor traditional financial institutions in the IPO allocation, neglecting the long-term supportive native participants of encryption, a practice that contradicts the core principles of the encryption industry.

Circle's IPO was priced at $31 per share, higher than the initial expected range of $24 to $26. The closing price on the first day was $84, and a week later, the stock price had exceeded $107. From this perspective, the investment banks' pricing of the IPO seems overly conservative, while Wall Street's enthusiasm for encryption assets, especially stablecoins, is quite high.

Reasons to invest in Circle include: it is currently the only publicly listed investment target focused on the growth of stablecoins; the stablecoin market is expected to grow to over $1 trillion in managed assets; USDC currently has $60 billion in assets under management, with an annual growth rate of 91%.

However, there are also some potential risks: Circle's business model is entirely reliant on interest rates, with all revenue coming from interest; dependence on partners such as Coinbase and BlackRock; limited revenue and profit growth over the past three and a half years; and the current stock price valuation of $107 is considered high.

Some senior figures in the encryption industry have criticized Circle's IPO allocation method. They believe that Circle's choice to allocate most shares to traditional financial institutions rather than crypto-native funds is a significant mistake. Many crypto institutions that have long supported and used USDC received very little or no allocation in this IPO, demonstrating Circle's shortsighted behavior favoring traditional Wall Street while neglecting crypto-native supporters.

Critics point out that Circle could have benefited long-term customers through an IPO, enhancing their return rates and asset management scale, thereby giving back to the entire encryption industry. However, Circle chose the opposite approach, allocating a large portion of the IPO shares to traditional financial institutions that may not understand its business.

This approach is seen as a departure from the core principle of "aligned interests" emphasized by the encryption industry. Over the past few years, the encryption industry has realized the binding of interests between users, investors, and project parties through innovative mechanisms such as tokens. Circle's adoption of the traditional IPO model and its disregard for native participants in the encryption space are viewed as a deviation from the spirit of the industry.

Regarding these criticisms, there are also different voices that believe: the IPO being oversubscribed by 25 times led to a general compression of quotas; underwriters played a leading role in the allocation process, etc. However, critics counter that as the issuer, Circle has the final say over the allocation list and ratios, and should not shift the responsibility to the underwriters.

In any case, the controversy surrounding Circle's IPO allocation reflects the differences in values and operational methods between the encryption industry and traditional finance. This debate will also prompt the industry to further reflect on how to embrace the mainstream while not deviating from the original intention of the encryption industry.