150 companies in the alliance behind OUSD: Why can't they still shake USDT and USDC?

Original article by ARK Invest's Director of Digital Asset Research Lorenzo Valente

Compiled by Qin Xiaofeng of Odaily Planet Daily (@QinXiaofeng 888 )

Editor's Note: Over the past week, more “negative news” has emerged regarding the stablecoin consortium project Open USD, including participating members denying the partnership, casting a shadow over the project's prospects. Today, ARK Invest's Director of Digital Asset Research Lorenzo Valente published an article analyzing OpenUSD's disadvantages and emphasizing the first-mover advantages of USDT/USDC.

He argues that stablecoins win through deep liquidity, established usage habits, and integrated ecosystems, not through alliances or profit sharing. Giants like Binance will not risk their core trading business, which relies on USDT liquidity, in exchange for OUSD's spread income. The consortium members have varying incentives, and OUSD overestimates the ability of shared economics to disrupt existing network effects.

It should be noted that Lorenzo Valente's firm, ARK Invest, added positions in June worth $44 million in Coinbase and $25.25 million in Circle's stock. The following is the original text by Lorenzo Valente, compiled by Odaily Planet Daily.

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The launch of OUSD caused a stir on social media. Many are now convinced Circle is finished, because a consortium of 150 companies—spanning payments, fintech, banking, crypto infrastructure, and consumer tech—will crush the competition and launch a stablecoin to rival USDC and even USDT.

I've previously posted a thread explaining why this move is severely overestimated, and why a consortium is a terrible organizational structure for conquering anything, let alone a market that has become a duopoly. In this short article, I want to focus on only one thing: the true network effects of stablecoins. Rather than repeating every argument, I want to expand on a specific example overlooked by everyone, because I believe both USDT and USDC possess deeply misunderstood and undervalued liquidity moats.

The network effects of stablecoins are not created by a long list of logos. They are created by liquidity, usage habits, collateral acceptance, integrations, brand recognition, market depth, settlement processes, and the fear of disrupting what already works.

This is why I believe Tether and Circle are two profoundly misunderstood companies.

First, the obvious point: OUSD will comply with GENIUS regulations, meaning it cannot directly share yields with users. This isn't news, yet people still shout at Circle to pay yields to stablecoin holders, as if OUSD could do that. The reality is quite the opposite: Circle is likely the issuer passing the most yield down to platforms and, subsequently, to end users in the market.

This is important because many claim OUSD will create a fundamentally different yield product for end-users. But that's not its model. The model is not “paying yields to stablecoin holders,” but “sharing the economic returns of reserve assets with the platforms and businesses that distribute and use the stablecoin.”

This is a crucial distinction.

The strongest argument I've seen for OUSD is that consortium members would have strong incentives to deeply embed OUSD in their businesses, because they would receive revenue share from this structure. Without knowing the specifics, let's assume its economic model is similar to previous consortiums: the operating company, Open Standard, retains a 25 basis point (bps) management fee, while each participant retains 100% of the net interest margin (NIM) generated by any OUSD on their platform, network, or protocol.

On paper, this seems like a deal anyone would sign immediately. But it completely ignores the fact that these companies derive value in other ways, and in many cases, their core businesses depend on the existing liquidity and network effects of USDT, USDC, other stablecoins, or simply other fiat currencies.

Pursuing the NIM from stablecoin reserves is only attractive if it doesn't jeopardize much larger revenue streams—that is the key point.

The best case study in the industry, and perhaps the strongest counterargument to OUSD, is Binance.

Binance is by far the largest exchange in the industry. It originally had its own branded stablecoin, BUSD, which peaked at a supply of around $23 billion before the New York Department of Financial Services (NYDFS) ordered issuer Paxos to shut it down in February 2023.

Look at the three major Asian exchanges, and you get three clear case studies. Today, Binance holds about $45 billion in USDT, Bybit holds about $4 billion, and OKX holds about $9 billion. Binance has always been, and remains, Tether's fortress and crown jewel; USDT is consistently the most liquid trading pair on the world's largest exchange.

Today, if you want to buy BTC, ETH, SOL, or open large perpetual contract positions, USDT remains the dominant quote currency in the offshore exchange ecosystem—a reality Binance helped create. USDT is embedded in the deepest order books, most liquid trading pairs, most active derivatives markets, and the workflows of the most important market makers and traders.

This is real network effect.

Now, many of you must be thinking: Why was CZ so naive? Why didn't he call Paolo and Giancarlo to demand at least a portion, or even most, of USDT's yield? Binance knows it holds significant bargaining leverage here.

The reason this never happened is extremely simple: From a revenue and enterprise value perspective, Binance's crown jewel is its trading business, and this trading business is cemented by USDT liquidity.

Let's do the math on why it's perfectly rational for CZ not to chase NIM or try to replace USDT with a more “incentive-aligned” stablecoin. The rough estimates below are based on on-chain data and assumptions; none are confirmed information.

Building from the bottom up:

• Derivatives (Core Engine). Binance accounts for roughly 40% of global crypto derivatives trading volume. Over the cycle, average daily volume is around $40-50 billion, annualized to about $10-15 trillion. The blended taker/maker fee rate, factoring in VIP discounts and BNB rebates, is roughly 5 bps. That amounts to about $5 billion annually from perpetuals and futures alone.
• Spot. Average daily volume is about $8-10 billion, annualized to around $3 trillion, with a blended fee rate of about 15 bps (far lower than Coinbase's retail rate, as Binance's user base is heavily skewed toward VIPs and they run zero-fee promotions). Add about another $5 billion.
• Other Businesses. Spreads on wealth management and lending, margin interest, Launchpool and listing economics, Binance Pay, staking commissions, plus float: they sit on roughly $46 billion in customer stablecoins. While they don't pool and deploy them like a broker-dealer, corporate treasury and yield-bearing products on these funds are significant at these interest rates. Add the BNB ecosystem economics, conservatively another $5-7 billion.

Remember, these are bear market figures. Conservatively, Binance is a $17-20 billion revenue business in a bear market, potentially approaching $25 billion in a bull market. An enterprise of this scale and quality would likely be valued at over $200 billion.

So, why isn't CZ rushing to replace USDT or demand better economic terms from the Tether team?

Because the entire reason Binance is what it is today, the reason over 300 million customers keep returning to the platform, is that it is the most liquid venue on Earth. Let's price the deal Binance would actually have to make.

Binance holds $45 billion in USDT on its platform. Assume it strikes a deal with OUSD, getting 90% of the yield. At an average Treasury yield of 3.8%, that's about $1.55 billion annually. This looks tempting only until you measure it correctly: risking a $25 billion revenue engine for $1.5 billion upside is something only a madman would do.

The glue holding Binance's trading castle together is precisely USDT. No incentive in the world would make CZ reconsider which stablecoin to champion.

And we don't need to guess, because someone has already tried. Over a year ago, Circle reportedly paid Binance a one-time fee of $60 million, plus ongoing monthly incentives tied to USDC balances on the platform. Despite this, USDC supply on Binance has roughly plateaued at $5 billion.

People severely underestimate the network effects these stablecoins generate for the businesses that host them. In most cases, the upside simply isn't worth risking your core revenue engine.

For an exchange, a stablecoin is not just cash. It is a quote asset, collateral asset, risk management asset, working capital asset, and unit of account for millions of traders. Replacing this underlying foundation is not free.

Not All Consortium Members Have the Same Incentives

Finally, the OUSD consortium includes very different types of businesses that do not monetize stablecoins in the same way.

Broadly, there are two models.

The first model is AUM monetization. These companies and protocols benefit from idle balances, deposits, or float. For them, the economic returns on reserve assets are directly relevant. A lending protocol, wallet, digital bank, or exchange with large customer balances will likely care a great deal about the NIM generated by stablecoin supply.

The second model is transaction turnover monetization. These are payment networks, processors, remittance companies, and commerce platforms that monetize through transaction flow rather than idle balances. For them, a stablecoin is more like a payment rail than a balance sheet asset. They likely care more about reliability, cost, compliance, speed, coverage, and customer experience than reserve yield.

An Aave and a Western Union bring very different things to OUSD. A DeFi protocol can help create supply by making OUSD useful as collateral or as a yield-bearing liquidity venue. A payment company might pass OUSD through its system and consume it at the edge. This is valuable for volume but is entirely different from creating persistent supply.

This is why the consortium structure isn't as powerful as it looks. Members might all like the idea of shared economic returns, but their incentives are not the same. Some will create supply, some will create turnover, some will deeply integrate, some will experiment, and some might do nothing after the news cycle.

In equilibrium, it's hard to believe all members will be equally motivated to promote OUSD; some will do the hard work of driving adoption, others will coast. This is the classic consortium problem.

Conclusion: OUSD is not irrelevant. It's one of the more interesting stablecoin experiments we've seen, and its economic model is clearly designed to target the reserve income advantage of incumbents. But the market overestimates how quickly a shared economy model can overcome existing liquidity barriers. Stablecoins aren't won by press releases; they are won by deep, repeated, high-trust usage in the places where money actually flows.

This is why USDT remains so powerful. This is why USDC has proven resilient and is growing so fast. This is why OUSD, despite its impressive consortium backing, faces a much tougher road than the market currently assumes.

The core question isn't whether OUSD can offer better economics to partners. The core question is whether those economics are valuable enough for partners to risk disrupting the businesses they have built around other currencies or stablecoins.

In many cases, the answer will be no.