Circle CEO responds to OUSD challenge: Stablecoins are "winner-takes-all," alliance model is destined to fail

Original text from Circle Founder & CEO Jeremy Allaire

_Compiled by Odaily Planet Daily, Qin Xiaofeng (@QinXiaofeng 888 )

_Editor's Note: On June 30, the stablecoin project _Open Standard, supported by 140 globally renowned companies, officially launched and plans to introduce a new dollar stablecoin, Open USD, later this year, targeting Circle (USDC). Circle (NYSE: CRCL) shares plummeted over 17%, drawing investor complaints. As founder & CEO, Jeremy Allaire stepped up to boost confidence with a long post.

He stated that the stablecoin market is "winner-takes-all," with USDC dominating through nearly a decade of application integration, global liquidity, and regulatory compliance. OUSD's claims of free redemptions, revenue sharing, and alliance models are unrealistic and may undermine infrastructure investment and efficiency. Following this news, Circle (NYSE: CRCL) shares rebounded 4% on July 1 before closing down 1.09%.

Below is an integration of two recent posts by Jeremy Allaire, compiled by Odaily Planet Daily. Enjoy~

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We have received many questions from the investor community asking for our views on OUSD, so I want to share my perspective directly here.

Stablecoin networks are platform-based businesses with network effects. Such businesses require long-term accumulation and tend toward "winner-takes-all" market structures, similar to other internet platform utility markets. Several factors drive this phenomenon.

First, stablecoin networks essentially function as public protocol and software layers on the internet. Their network strength depends on the number and scope of applications and services integrated into the network. Every developer or service provider integrated into the network brings more network effects, attracting more developers, adding more utility and network effects, ultimately driving demand for the digital currency itself, and further reinforcing these advantages through liquidity network effects.

We have already achieved this at scale with the USDC network today—thousands of services integrated into our network bring immense utility to each application and great convenience to all users, who benefit enormously from existing coverage and interoperability. This further drives user and developer preference. We have spent nearly a decade building this ecosystem, and this process is accelerating as mainstream institutions connect to the network, linking their customers and users.

We further enhance and expand the network by building software stacks—such as CCTP and Gateway protocols—that promote interoperability, security, and liquidity globally. This expands the target coverage for application builders and developers, enabling them to easily tap into existing liquidity and network effects. Now, we are seeing this software stack being introduced into various chains, permissioned L2s, government-built networks, and more.

Second, liquidity network effects are fundamental. Liquidity breeds liquidity. For stablecoins to achieve scale and utility, they must have high liquidity—both in the primary market (e.g., through major global financial centers with top-tier direct bank liquidity) and in the secondary market, providing accessible and tradable liquidity for retail and institutional clients across regions, connecting to various global fiat instruments. Those seeking to acquire and transfer value must be able to conveniently enter and exit the digital currency.

In this regard, we have spent nearly a decade building liquidity, now deeply embedded in exchanges, DeFi platforms, payment service providers (PSPs), payment companies, regional exchanges, and many others. Establishing these liquidity network effects also involves building a global regulatory infrastructure to ensure stablecoin usability under different regimes worldwide. Today, USDC is one of the top three most liquid digital assets globally, with a clear gap from latecomers. BTC, USDT, and USDC all have extremely high liquidity, while the closest other dollar stablecoin is about one-tenth the size of USDC, with liquidity often concentrated in a single exchange's order book. USDC's liquidity is widely distributed across dozens of different platforms. Building this liquidity has been an ongoing task for nearly a decade and continues.

Third, network effects stem from deep integration with policy and regulatory environments. In many cases, this results from years of obtaining licenses (e.g., USDC is currently the only major global stablecoin usable throughout Europe or Japan), and more stablecoin regulatory frameworks are emerging—Circle is at the forefront of ensuring USDC is officially recognized, registered, licensed, and accepted in the world's most important markets. This also involves building global banking, reserve management, treasury, and liquidity systems that can operate nearly 24/7 across global markets and banking systems. This global effort is a massive undertaking we have been investing in for years.

All these investments by Circle and our global ecosystem of thousands of partners ultimately deliver the world's most trusted and accessible digital dollar infrastructure—any user, developer, or enterprise can freely and conveniently access this utility, and we have no intention of slowing down.

All these factors combine and are reflected in the data. According to Artemis, a third-party analytics firm tracking stablecoin adoption, in Q1 2026, USDC processed nearly $30 trillion in on-chain transaction volume, accounting for 80% of all dollar stablecoin transactions on blockchains; USDT handled the remaining 20%; and all other dollar stablecoins combined accounted for 0% (i.e., less than 0.5%). While other stablecoins may have some circulation, most of it comes from promotional and incentive activities, with extremely limited actual usage—because these coins have very limited liquidity and network utility.

The above not only highlights Circle Network's advantages but also the challenges every entrant must face. Of course, I have also heard many voices claiming OUSD is better than USDC in many aspects.

(1) Free minting and redemption. Some argue that existing stablecoins charge redemption fees and payment companies should not bear these costs (despite the entire payments industry being built on charging small basis points at various entry and exit points of its networks). There is a structural market reality—certain stablecoins charge extremely high redemption fees and have limited redemption facilities—the effect is that stablecoins with good redemption facilities, ample liquidity, and no fees become exit channels for competitor stablecoins. Saying "offer unlimited free redemptions" may sound easy, but market realities may force behavior changes. Circle addresses this through contractual mechanisms rather than blanket fee waivers and has already resolved it.

(2) Everyone wins, sharing revenue. This sounds great, but the market reality is quite different. Today, Circle shares most of its revenue with distribution partners and continues to aggressively expand collaborations with leading enterprises across industries. But at the same time, we retain substantial revenue to invest in large-scale market infrastructure—precisely the facilities that make this network a powerful and valuable utility that builders worldwide can rely on. Giving away all revenue would effectively "starve" the infrastructure, leading to systemic underinvestment and ultimately limiting the platform's breadth. (Odaily Note: In Q1 2026, Circle's revenue was $694 million, with distribution expenses of $407 million, accounting for 59%.)

Additionally, Circle believes the future stablecoin market could be orders of magnitude larger than today. We are actively bringing more partners into the USDC ecosystem through a diverse and growing partner model, covering exchanges, custodians, payment companies, asset issuers, and more. We are happy to continue building with a "Big tent mentality," allowing the entire ecosystem to add value together. (Odaily Note: "Big tent mentality" is a political and organizational strategy where a party, enterprise, or institution seeks to attract the broadest possible group by accommodating diverse and even opposing views and factions, uniting through common ground while reserving differences to build maximum consensus, thereby gaining more support or market share.)

(3) An alliance where everyone has a voice. Perhaps I am pessimistic, but the track record of alliance-style products in achieving scale, product-market fit, and even basic product agility is absolutely disappointing. While there are examples of financial alliances operating utilities, they often move slowly. Coordination among large enterprise groups is poor, incentives misaligned, progress delayed, and they rarely create a space for truly lasting innovation and competitiveness. Moreover, they often operate in self-interest, making the alliance itself resource-poor at the operational level.

We actually tried this approach in the early days of USDC, and even with few participants, we encountered countless challenges and complexities. Smaller, tighter strategic collaborations and commercial arrangements led by product and platform builders who can independently move forward almost always outperform large alliances. But often, when such alliances form, everyone feels they should list their logo, make a statement, and loudly proclaim openness. However, these companies typically eventually turn to their operations and make the best decisions for their customers—which often means partnering with market leaders to build lasting win-win partnerships.

There has also been much commentary about Circle's partnership with Coinbase and what it all means. Our stablecoin partnership with Coinbase remains as strong as ever, and I believe we both see tremendous opportunities to expand the USDC network.

One final note: Circle is always committed to supporting a wide range of products and infrastructure, even if we may compete with partners' products in some business areas. We work closely with many founding members of OUSD, and we expect these members to continue being important partners and customers of USDC. At the same time, as Circle diversifies our product and platform stack—expanding into Arc, CCTP, CPN, StableFX, Agent Stack, and many other areas—we are also expanding collaboration and cooperation with dozens of other stablecoin issuers, helping them issue on Arc, leverage our interoperability infrastructure, gain support in our wallets, and become settlement and FX options on CPN and StableFX.

We are firmly bullish on the growth of the stablecoin ecosystem and welcome OUSD as a new member of the community.