CIRCLE is going public this Thursday, and this time it seems that the attention from outside the circle is much higher than that from inside; some friends say that recently institutions in the A-share and Hong Kong markets have been scheduling stablecoin roadshows, and the Hong Kong stablecoin bill has caused ZhongAn to soar.

My intuition tells me there seems to be a significant information or sentiment gap here?

If you had to choose a related target within the circle for Circle's IPO, which one would you choose? My first reaction is $MKR.

Normally, to conduct such a transmission, there are two prerequisites: one is that Circle's IPO receives high attention and the stock price performance on the listing day cannot be too poor. The second is that Circle's reaction can be transmitted to a target within the circle, and the choice of this target is crucial. Otherwise, you might as well just buy Circle.

Let's start with the first point - Circle’s first day performance prediction?

The currently known information is

1⃣ Circle plans to raise $624 million by issuing 24 million shares, with a target valuation set at $6.7 billion.

2⃣ Cathie Wood's ARK will invest $150 million, and Larry Fink will invest another $60 million.

3⃣ Unlike the last time with Coinbase, this time it's a regular IPO listing, and the management cannot sell stocks within 180 days.

Considering these points, we can estimate a valuation of $6.7 billion (if priced within the circle, it's definitely not expensive; remember that peak ENA was a $10 billion project), institutions are willing to pay this valuation, and unlike the previous CB, there is no selling pressure from the management.

Moreover, combining the fact that Circle can be considered the only stock in the recent narrative of traditional finance stablecoins, it has a certain rarity; today, Everbright Holdings rose nearly 10% due to its previous investment in Circle.

So, on the day of the IPO, if not skyrocketing, at least I don't think the performance will be too poor.

Even our ongoing concern about the circle channel fees being too high, with Coinbase draining us, I've seen many research reports and institutional opinions that don't seem to care much?

Now onto the second point - which target can best leverage Circle?

Historically, it's $MKR (now renamed to $SKY).

1⃣ I remember on the day SVB crashed, MKR also followed with a sharp drop and rise. The underlying asset of DAI is supported by USDC.

2⃣ From a valuation perspective, Circle's net income in 2024 is projected to be $157 million, with a valuation of $6.7 billion, while $MKR's annual income is about $100 million, corresponding to a $1.5 billion valuation, and it repurchases approximately $250k of tokens daily. From a fundamental perspective, it seems a bit underestimated? Perhaps we could tell a narrative of Circle reshaping MKR's valuation.

3⃣ Recently, $MKR also opened staking, providing an annualized return of about 18%. Just this morning, a giant whale withdrew tokens to participate in staking.

4⃣ In recent days, due to the $cookie event, everyone has been talking about $spark, which is actually a sub-DAO of Maker.

The alternative targets also include $LINK (Circle's CCIP protocol), $ENA, $CRV, but I think they might not be as good as $MRK, so I ultimately chose $MKR.

This logic actually doesn't have a very high probability of success because it involves two implicit probabilities. First, CIRCLE must perform well on its IPO, and second, it must be able to transmit to the circle and happen to be $MKR. If each event has a 50% chance, then the combined probability is only 25%.