Circle CEO's Response to OUSD Challenge: Stablecoins Are a "Winner-Takes-All" Game, Alliance Models Are Doomed to Fail

Original post by Circle Founder & CEO Jeremy Allaire

Compiled by Odaily (Qin Xiaofeng, @QinXiaofeng 888 )

Editor's Note: On June 30, the stablecoin project Open Standard, backed by 140 globally renowned companies, was officially announced. It plans to launch a new dollar stablecoin, Open USD, later this year, directly challenging Circle (USDC). Circle (NYSE: CRCL) shares fell over 17% at one point, drawing widespread investor complaints. Founder & CEO Jeremy Allaire could no longer stay silent and published a lengthy statement to boost confidence.

He stated that the stablecoin market is a "winner-takes-most" arena. USDC has maintained its dominant position through nearly a decade of building application integrations, global liquidity, and regulatory compliance. The promises of free redemptions, revenue sharing, and an alliance model by OUSD are not realistic and may undermine infrastructure investment and efficiency. Following this news, Circle (NYSE: CRCL) shares rebounded 4% on July 1 before closing down 1.09%.

The following is a compilation of two recent posts by Jeremy Allaire, compiled by Odaily. Enjoy~

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We've received many questions from our investor community asking for our perspective on OUSD, so I wanted to share my views directly here.

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

First, stablecoin networks effectively function as internet public protocols and software layers. Their network strength depends on the quantity and reach of applications and services integrated into the network. Every time a developer or service provider integrates with the network, it generates 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've already achieved this at scale with the USDC network today – thousands of services are integrated into our network. This provides immense utility for each application and great convenience for all users, who benefit significantly from the existing coverage and interoperability. This further drives user and developer preference. We've spent nearly a decade building this ecosystem, and this process is accelerating now as mainstream institutions connect to the network, onboarding their customers and users.

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

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

In this regard, we've spent nearly a decade building liquidity, which is now deeply embedded in exchanges, DeFi platforms, payment service providers (PSPs), payment companies, regional exchanges, and many others. Building these liquidity network effects also involves constructing a global regulatory infrastructure to ensure the stablecoin is usable under different legal systems worldwide. Today, USDC is one of the top three most liquid digital assets globally, with a clear gap behind later entrants. BTC, USDT, and USDC all have extremely high liquidity. The closest other dollar stablecoins are about one-tenth the size of USDC, often with liquidity concentrated in a single exchange's order book; whereas USDC liquidity is widely dispersed across dozens of different platforms. Building this liquidity has been a task we've undertaken for nearly a decade and continues.

Third, network effects come from deep integration with policy and regulatory environments. In many cases, this is the result of years of effort to obtain licenses (for example, USDC is currently the only major global stablecoin fully usable across Europe or Japan). More stablecoin regulatory frameworks are emerging, and Circle leads in ensuring USDC receives official recognition, registration, licensing, and acceptance in the world's most important markets. This also involves building global banking, reserve management, treasury, and liquidity management systems capable of operating across global markets and banking systems nearly 24/7. This globalization effort is a massive undertaking we've been investing in for years.

The end result of all these investments by Circle and our ecosystem of thousands of global partners is the world's most trusted and accessible digital dollar infrastructure – a utility that any user, developer, or enterprise can freely and easily access. And we have no plans to slow down.

All these factors compound and are ultimately 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%. All other dollar stablecoins combined represented 0% (i.e., less than 0.5%) of transactions. While other stablecoins may have some circulating supply, most of it comes from promotional and incentive activities, with extremely limited actual usage – because their liquidity and network utility are extremely constrained.

What's described above is not just the strength of Circle's network; it's also the challenge any latecomer must face upon entering the market. Of course, I've also heard many voices arguing that OUSD is superior to USDC in several aspects.

(1) Free Minting and Redemption. Some argue that existing stablecoins charge redemption fees, and payment companies shouldn't bear these costs (even though the entire payments industry is built on charging small bps fees at various entry and exit points of the network). There's a structural reality in the market – some 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 can become the exit ramp for competing stablecoins. It might seem easy to say "offer unlimited free redemptions," but market realities may force a change in that behavior. Circle addresses this through contractual mechanisms rather than blanket fee waivers, and we have resolved it.

(2) Win-Win for Everyone, Shared Revenue. This sounds great, but market reality is quite different. Currently, Circle shares most of its revenue with distribution partners and is continuously pushing to expand collaborations with leading companies across industries. However, we also retain substantial revenue to invest in large-scale market infrastructure – the very infrastructure that makes this network a powerful and valuable utility that global builders can rely on. Giving away all revenue would starve the infrastructure, leading to systemic underinvestment, which will inevitably limit the platform's breadth. (Note: In Q1 2026, Circle's revenue was $694 million, with distribution expenses of $407 million, accounting for 59%).

Furthermore, Circle believes the future stablecoin market could be several orders of magnitude larger than today. We are actively bringing more partners into the USDC ecosystem through a diverse and growing partnership 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 grow in value together. (Note: "Big tent mentality" is a political and organizational strategy where a party, company, or institution includes diverse and even opposing viewpoints and factions to attract the broadest possible group, seeking common ground to build maximum consensus and gain more support or market share.)

(3) An Alliance Where Everyone Has a Voice. Perhaps I'm being pessimistic, but the track record of alliance-based products in achieving scale, product-market fit, or even basic product agility is absolutely disappointing. While there are examples of financial alliances operating utilities, they are often slow-moving. Large groups of enterprises do not coordinate well, have misaligned incentives, slow down progress, and rarely create space for lasting innovation and competitiveness. Moreover, they often act in their own self-interest, starving the alliance itself of resources at the operational level.

We actually tried this approach in the early days of USDC, and even with a small number of participants, we encountered countless challenges and complexities. Smaller, more focused strategic collaborations and commercial partnership arrangements, led by product and platform builders who can move independently, almost always outperform large alliances. Often, when such alliances are formed, everyone feels they should put their logo on it, take a stand, and loudly proclaim openness. However, these companies typically eventually turn to their operating divisions to make the best decisions for their customers – which often means partnering with the market leader to build lasting win-win relationships.

There's also been commentary about Circle's relationship with Coinbase and what it all means. Our stablecoin partnership with Coinbase is as strong as ever, and I believe we both see a huge opportunity to expand the USDC network.

One final point: Circle is always committed to supporting a wide range of products and infrastructure, even if we may compete with our partners' products in certain business areas. We work closely with many of OUSD's founding members, and we expect these members will continue to be important partners and customers of USDC. At the same time, as Circle diversifies its product and platform stack – expanding into areas like Arc, CCTP, CPN, StableFX, Agent Stack, and many more – we are also continuously expanding collaboration and cooperation with dozens of other stablecoin issuers. We help them issue based on Arc, utilize our interoperability infrastructure, gain support in our wallets, and become settlement and foreign exchange options on CPN and StableFX.

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