two ️⃣ Cost breakdown The main cost of Circle is its distribution expenses, which will be $1 billion in 2024, accounting for up to 60% of its revenue. Among them, the expenses paid to Coinbase alone will exceed $900 million. Is the key issue here? Why does Circle charge Coinbase such high distribution fees? The reason is that the agreement between the two regarding Circle's income distribution stipulates: i) Circle first reserves approximately 1% of its revenue to cover daily costs such as administrative, financial, and compliance expenses, which is called (Issuer Retention) I) For the remaining portion, Circle and Coinbase will take a corresponding share based on the proportion of USDC held on their own platforms. For example, in 2024, USDC on Coinbase will account for 18% of all issuances, and 18% of the total revenue (1.6 billion US dollars), which is 288 million US dollars, will be given to Coinbase in this portion; -After the allocation of i) and ii), Coinbase will distribute an additional 50% of the remaining income after deducting fees for some other promoters. So we found that out of the $1.6 billion Circle earned in 2024, Coinbase contributed 18% of its circulation but took away over 56% of its revenue. Stable coin issuers are working for exchanges!