OUSD and Circle: How big is the threat, really?

Hey, Jinse Ouba, Golden Finance

Since June 30, when OpenUSD (OUSD) was officially announced, the shake-up in the stablecoin market has not yet subsided.

Open Standard, an alliance jointly formed by more than 140 global payment, asset management, and technology giants—including Stripe, Visa, and BlackRock—has entered the stablecoin race with a brand-new business model, directly challenging the traditional setup centered on Circle USDC. The day the news broke, Circle’s stock price in the US market plunged 16%, and its market value evaporated by more than $3.6 billion. The market priced this potential disruption in the most straightforward way.

But the frenzy in market chatter has always been sharply polarized: some claim that OUSD will quickly upend USDC’s regulatory standing and market position by leveraging the giant-umbrella alliance and a dividend model, reshaping the global dollar stablecoin landscape; others believe that alliance-style stablecoins formed by conglomerates will ultimately repeat the fate of many past alliance coins—starting with an explosive launch, followed by waning coordination and weak real-world execution; after a brief uproar, they fall completely silent.

Is OUSD truly a structural disruptor that can overturn Circle, or just a short-lived attention-grabbing gimmick product? To clarify the answer, you can’t just look at the fancy roster of backers and promotional talking points—you need to dissect the ultimate showdown in the stablecoin track across four dimensions: the essence of the business model, historical precedents in the industry, both sides’ core barriers, and real market demands.

I. Seemingly benchmarked, but actually rewriting the rules

For a long time, stablecoins have had a simple, rigid business logic: issuers monopolize profits, channels passively share revenue, and users get no upside. USDC, under Circle, has managed to remain the industry’s No. 2 player and become a compliance stablecoin benchmark primarily on two pillars: first, top-tier global compliance regulatory credentials; second, exclusive rights to the interest from reserve Treasuries.

USDC’s profit model is extremely clear: the vast stablecoin reserves deposited by users are configured mostly into US short-term Treasuries, generating essentially risk-free interest income that almost all goes to Circle. And as the core distribution channel, Coinbase received a $908 million cut from Circle in 2024—accounting for 54% of Circle’s annual revenue. That revenue-share ratio has been fixed for a long time, with strict limits on channel influence. In short, Circle controls the most critical cash flows and pricing power in the stablecoin arena, while partners can only receive a fixed share and cannot share the growth upside of the ecosystem.

OUSD’s entry has completely torn up this long-running industry playbook. Its core destructive power has never been technological innovation—it is a business-model “dimension-lowering” disruption, and a precise strike at Circle’s profit foundation:

First, zero-fee transfers that massively lower the barrier for participation. Unlike USDC/USDT’s 0.1%-0.5% issuance and redemption fees, OUSD enables free minting and free redemption in full, with no volume caps and no hidden costs—squeezing out the cost advantage that traditional stablecoins used to rely on in the trading path.

Second, revenue sharing and co-governance that dismantle Circle’s exclusive revenue moat. OUSD does not monopolize interest from reserve assets. After deducting a small management fee, the vast majority of Treasury收益 will be returned to Visa, Stripe, various partner banks, and crypto platforms according to each institution’s circulation contributions and scale of scenario expansion. This means every institution participating in OUSD ecosystem building can continuously earn incremental revenue—completely overturning the old order of “issuer wins alone, channels work for wages.”

Third, alliance-style “decentralized” governance that tries to break single-institution monopolies. USDC is fully controlled by Circle’s single team; decisions, iterations, and scenario expansion depend heavily on the company itself. In contrast, OUSD is jointly co-governed by 140 global giants, covering the full spectrum from payments and asset management to traditional finance and the crypto ecosystem—its scenario resources and execution capability far exceed any single enterprise.

This new model directly targets Circle’s biggest pain point: Circle’s profits fundamentally come at the expense of channel and ecosystem partners’ earnings; while OUSD’s growth comes from letting all participants share profits together and build momentum together. This is also the core reason the capital market panic-sold Circle stock—what the market fears isn’t short-term user outflows, but that Circle’s survival profit model will be completely replaced.

II. Why do most alliance coins fail to escape “here today, gone tomorrow”?

Skepticism toward OUSD is not without basis. Looking across the decade-long development of stablecoins, giant-alliance stablecoins have never produced true industry behemoths; almost all alliance projects escape the fate of “the peak at launch, then sustained weakness.”

The most typical case is Diem (formerly Libra). In 2019, Facebook led giants like Visa, Mastercard, PayPal, and Uber to launch Libra—the lineup’s luxury far surpassed OUSD today. Yet regulatory pressure, conflicting interests among alliance members, and contradictions between centralized governance and the ideal of decentralization ultimately caused the project to quietly exit after repeatedly shrinking its vision.

The root problem is highly consistent: an alliance’s essence is compromise of interests, not unity of interests. When dozens, even over a hundred, institutions jointly operate, they inevitably face issues like lengthy decision processes, unclear division of rights and responsibilities, uneven resource投入, and divergent core objectives. A single institution pursues profit efficiency, while an alliance system pursues multi-party balance—within the fast-changing crypto market, balance often means lag, conservatism, and missing opportunities.

Beyond that, alliance coins commonly suffer from the problem of “easy to create hype, hard to execute.” When big institutions announce cooperation, they release heavyweight resources and scenario expectations that boost market heat. But once the heat fades, no party is willing to continuously invest core resources or bear the cost of trial and error. In the end, everyone watches from the sidelines and resources sit idle, and the project gradually fades from the market.

From this perspective, OUSD naturally inherits the inherent risks of the alliance model. Its partner institutions span multiple tracks—payments, banks, asset management, tech, and crypto. Enterprises differ drastically in size, development needs, risk preferences, and compliance standards. Stripe and Visa prioritize payment scenario adoption; BlackRock focuses on asset management and reserve收益; crypto platforms care about trading liquidity; traditional banks strictly control compliance risk. When multiple parties’ demands can’t be unified, the probability of future decision friction and dispersed resources is not low.

Circle CEO Jeremy Allaire has also openly questioned the long-term execution capability of alliance-style stablecoins, arguing that large-enterprise alliance models naturally lag in innovation efficiency; if all reserve收益 are distributed, it may lead to insufficient infrastructure investment and make it difficult to support continuous ecosystem iteration over the long term. (Note: This is general commentary by Allaire on alliance models in public interviews, not a point-by-point response specifically naming OUSD. Readers should note the context difference.)

Is alliance failure destiny, or can it be broken?

It must be admitted that OUSD and historical cases like Diem have key differences. First, Diem tried to challenge the sovereign currency system and faced a systemic regulatory ban; OUSD, by anchoring to a compliant dollar payment track, has far lower political sensitivity than Diem. Second, OUSD’s actual operations are led by Stripe’s Bridge team, not truly a “hundred-person committee” co-governance—more accurately, alliance members are mostly profit allocators and channel partners, rather than the ones making daily decisions. If this architecture can be implemented, OUSD could, to some extent, avoid the traditional alliance “governance paralysis” dilemma.

But whether these differences are enough remains to be seen. “Profit allocators not participating in governance” looks ideal on paper; however, when there are disputes over profit allocation, how the balance of voice tips is often the starting point of an alliance splitting.

III. Objective comparison: Circle’s barriers that OUSD can shake, and those it can’t

To precisely assess the threat level, you must discard extreme bullishness and bearishness, and clearly separate OUSD’s advantage attack zones from Circle’s absolute moats. They are not perfect substitutes; it’s a case of misaligned competition and localized disruption.

1. OUSD precisely penetrates: Circle’s fatal weaknesses and incremental markets

First, full-spectrum domination of channels and business scenarios. Circle’s core scenarios concentrate on crypto trading and on-chain savings; its penetration into offline payments and traditional finance is weak, making it highly dependent on Coinbase as a single channel. By August 2026, the revenue-share agreement between it and Coinbase will expire, and channel uncertainty will rise sharply. OUSD, backed by Visa, Stripe, and the global merchant system, is naturally suited to traditional finance scenarios such as offline payments, cross-border settlements, and enterprise cash flow transfers—allowing it to quickly enter incremental markets that USDC cannot cover.

Second, a superior profit distribution mechanism that tightly binds ecosystem partners. In a stablecoin sector with severe commoditization, revenue distribution is the most core competitiveness. OUSD lets all participants share in growth upside, while Circle sticks to an exclusive revenue model, leaving existing partners with insufficient motivation to continuously create momentum. In the long run, more payment institutions, financial platforms, and merchants will proactively tilt toward the OUSD ecosystem, forming a virtuous cycle.

Finally, solving the cost pain points of traditional stablecoins. Zero minting and redemption fees, efficient 24/7 circulation—perfectly suited for emerging scenarios like small and micro payments, high-frequency cross-border settlements, and AI machine micro-trades. Meanwhile, USDC’s fee structure and process barriers no longer fit today’s lightweight, high-frequency on-chain finance needs.

2. Circle is unshakable: OUSD’s core barriers it can’t break through in the short term

First, absolute monopoly of global compliance credentials. In the stablecoin track, compliance is a line of life and death, not a bonus. USDC is the most fully compliant dollar stablecoin globally, with the highest regulatory recognition; it has obtained official admission credentials in multiple countries, with transparent reserves, comprehensive audits, and mature risk-control systems. As a brand-new alliance product, OUSD has not yet formed a mature compliance framework. With 140 institutions spanning across the globe, compliance standards are hard to unify. In the short term, it cannot gain broad, comprehensive recognition from mainstream regulators; institution-level and compliance-level capital will not rush in.

Second, the deep network effects of the crypto ecosystem. After years of accumulation, USDC has been deeply embedded across all public chains, DeFi protocols, and CEX platforms—forming a complete liquidity loop, clearing systems, and user habits. The stablecoin’s core competitiveness is liquidity and ecosystem compatibility, which is the result of long-term accumulation, not something that capital and alliance hype can replicate in the short term. In OUSD’s early stage, it will inevitably face issues like liquidity fragmentation, insufficient ecosystem adaptation, and weak user recognition.

Third, operational efficiency and iteration speed advantages. Circle is a single market-driven enterprise: decision-making is efficient, iteration is flexible, and it can quickly track market changes, adjust product strategies, and respond to regulatory shifts. By contrast, OUSD’s alliance governance model requires multi-party consultations for any rule adjustment, feature iteration, or risk response. Its efficiency is far lower than Circle’s. In a crypto market with extremely fast rhythms, efficiency gaps will keep getting amplified.

IV. Final assessment: OUSD’s real threat level to Circle

Across four dimensions—model, precedent, barriers, and market—we can reach a clear conclusion: OUSD will not completely replace USDC, but it will end Circle’s era of exclusive margins and become its strongest structural challenger.

First, there is no disruptive replacement; Circle’s core base remains solid. In the next 1-2 years, thanks to compliance moats, mature ecosystems, and deep liquidity, USDC will still be the preferred stablecoin for institutional capital, compliant trading, and mainstream DeFi. Market share will not drop off a cliff; the user and ecosystem moats built earlier are hard to shake.

Second, incremental markets are comprehensively taken over, sharply lowering Circle’s growth ceiling. OUSD will not go head-to-head with USDC in the existing crypto stablecoin market. Instead, it will rely on the resources of traditional finance giants to comprehensively capture incremental tracks such as offline payments, cross-border settlement, enterprise finance, and emerging machine payments. This means Circle’s previously exclusive stablecoin overseas expansion and traditional finance digitization upside will be continuously carved up by OUSD, and future growth space will be significantly compressed.

Finally, industry rules are rewritten completely, forcing Circle into an “involution” era. OUSD’s profit-sharing model and zero-cost transfer model will become the new industry standard for stablecoins going forward. The era when stablecoin issuers used to lie back and profit from interest alone has come to an end. Circle will be forced to adjust its revenue mechanisms, share more with channels and users. Its long-term profitability and valuation logic will face ongoing pressure, and the capital market’s pessimistic pricing is not just short-term sentiment—it reflects a long-term logic reshaping.

V. Conclusion

The biggest significance of OUSD’s emergence has never been to eliminate USDC or overturn Circle, but to break the oligopoly-like ossification in the stablecoin track.

Over the past decade, USDT and USDC relied on first-mover advantages and monopolistic business models to firmly control the global on-chain dollar system and enjoy an exclusive market dividend on the order of ten trillion. Meanwhile, OUSD used the most straightforward business logic to prove: the ultimate competitiveness of stablecoins has never been the credentials and technology of a single enterprise—it is the ecosystem’s inclusiveness, the sharing of interests, and full coverage of scenarios.

In the short term, limited by internal friction among alliance members, compliance shortcomings, and a thin ecosystem, OUSD is unlikely to rise quickly and will likely go through a phase of declining heat and slowing growth, consistent with the development pattern of alliance projects. But in the long term, its very existence is enough to completely change Circle’s fate.

Circle won’t die. But the era of making money while lying back, exclusive monopoly, and enjoying exclusive dividends is already completely over. In the future, stablecoin competition will no longer be a contest of strength among a single enterprise—it will be a comprehensive game across the entire ecosystem, all scenarios, and the entire chain of shared interests. And OUSD is precisely the key that opens this new transformation.