From Circle to OUSD: The Offense and Defense in the Stablecoin Space

Over the past couple of days, a piece of news has stirred up some waves in both the crypto ecosystem and the U.S. stock market ecosystem.

It is reported that payment giant Stripe/Tempo, together with credit card giants Visa and Mastercard, asset management giant BlackRock, and major crypto exchange Coinbase—over 140 companies in total—jointly launched the Open Standard Alliance and rolled out a new stablecoin called Open USD (OUSD).

This news sparked a lot of commentary on X, and many people believe that Circle’s position is being threatened by this organization and OUSD.

In a previous Q&A article, I shared my thoughts on Circle:

I’m not very confident about its business model, so I’ve never bought its stock.

To this day, I still haven’t bought its stock, but I’ve always kept some degree of attention on it. So after seeing this news, I took the opportunity to sort out my thoughts again.

Although I haven’t bought its stock, and I still have a lot of questions about it, I believe that ultimately this new stablecoin launched by an alliance like this probably won’t have much impact on Circle’s position.

My reasons are mainly two:

The first reason is a rule of thumb I’ve long trusted—within a new ecosystem, the ultimate top players are almost always native founding teams from that new ecosystem, and very rarely come from old-world veteran players.

In the stablecoin space, who are the native founding teams?

In my view, the strongest are three: USDT, USDC, and DAI/USDS.

It’s also possible that new native teams will emerge in the future.

Beyond that, companies like Stripe, MasterCard, and so on all belong to old-world players. They will likely be constrained by their “experience,” and end up creating things that are kind of awkward or mismatched.

From a technical perspective, issuing stablecoins faces no real obstacles; the difficulty lies in usage and promotion. And this kind of usage and promotion requires a certain unique crypto temperament—something old-world players are very lacking in, or to put it bluntly, they don’t have it at all.

So the threat to Circle most likely won’t come from something cooked up by these old-world player alliances.

The second reason is that, generally speaking, most such alliances are all noise and no action. On the surface, they come from different industries, gather different needs, and are able to create something that is more widely accepted. This kind of background is an advantage in terms of legislation and regulation, but in the business world it is often a disadvantage, because such loose alliances are often unable to truly and strongly drive commercial adoption.

The likely situation for OUSD in the future will be: it will have application scenarios and real-world adoption, but it will be difficult to shake USDC’s position.

So this piece of news can basically be ignored entirely.

As for Circle, besides the fact that there are still some points about its business model that I haven’t figured out, another issue is that I have a reserved attitude toward its team.

Circle’s founding team is undoubtedly excellent, but it still falls short of what I had imagined.

This may come from some kind of obsession of mine— the crypto ecosystem is a brand-new world. Such a world is enough to provide unique conditions for the birth of great companies in history. So I’ve always been looking forward to seeing some remarkable people and remarkable companies emerge from this ecosystem.

What makes someone “remarkable” isn’t that easy to define, but what makes someone “not that remarkable” is actually easy to see.

What exactly makes me feel that Circle’s team is “not that remarkable”?

It’s that they issued their own layer of blockchain—to build their own payment chain.

In the crypto ecosystem, the first thing that’s easiest is issuing tokens; the second thing that’s easiest is building chains.

Is issuing a token feasible? Of course it is—if it’s needed, then the team should issue a token. But if it’s fundamentally not needed at all, does the team have the courage to hold their breath and not issue a token?

Similarly, is building a chain feasible? Of course it is—if it’s needed, then the team should build one. But if it’s fundamentally not needed at all, does the team have the courage to reject temptation and not build a chain?

A path that’s easy to think of in the stablecoin space is building your own blockchain, because “stablecoins need payment rails,” so building a chain becomes a “foregone conclusion.”

Stripe built its own chain, and Plasma is also a chain...

But in my view, most of the blockchains that claim to be exclusively for the payments track will be proven to be wasted effort in the future. When I say they are “useless,” I don’t mean completely worthless—it means many of them will have users, but they will occupy only a very small share of the market.

When old-world players enter this track, it’s easy to fall into the trap of building a chain. If a native team can’t even see that trap and still jumps in—that indicates the team’s underlying nature is a bit mediocre.

For a company, when it has ample cash and resources on hand, doing whatever it wants is often easy. But being able to resist temptation and not do something is often extremely difficult.

Unfortunately, Circle didn’t manage to escape that.

So, in my eyes, it’s not that remarkable.

I still don’t fully understand its business model, and its corporate culture and characteristics don’t attract me very much, so I’ve just been watching from the sidelines.