Circle CEO Responds to OUSD Competition Concerns: Stablecoin Winner Takes All! USDC's Ten-Year Network Effect Forms Triple Moat

BlockBeats News, July 1st, Circle Co-founder and CEO Jeremy Allaire published a comprehensive response to investors' questions about the emerging stablecoin OUSD, emphasizing that stablecoins are a long-term game of platform and network effect accumulation, with a winner-takes-all characteristic.

The network strength of USDC comes from a triple barrier:

First, developer and application integration network effect: Thousands of services have integrated USDC, with each integration amplifying the network's utility, forming a positive flywheel of developer preference and user stickiness;

Second, liquidity network effect: USDC is now the world's third-largest digital asset by liquidity, on par with BTC and USDT, while the liquidity of other dollar-pegged stablecoins is only one-tenth of it and highly concentrated on a single exchange platform to boost volumes. The USDC liquidity landscape is dispersed across dozens of trading venues, establishing this global liquidity foundation has taken nearly a decade;

Third, deep integration of policy and regulation: USDC is the only large-scale global stablecoin covering Europe and Japan, and Circle continues to invest in the global banking system, reserve management, and near-24/7 liquidity infrastructure. Artemis data shows that in Q1 2026, USDC processed nearly $30 trillion in on-chain transactions, accounting for 80% of all dollar-pegged stablecoin transaction volume.

In response to the core selling points of OUSD, Allaire addressed them one by one:

First, while free minting and redemption may sound attractive in theory, in the market reality, a stablecoin with strong redemption capabilities, good liquidity, and zero fees will naturally become competitors' exit ramps. Circle addresses this issue through a contractual mechanism rather than vague fee waivers.

Second, the "shared earnings for all" sounds appealing, but Circle has already allocated most of the revenue to distribution partners, while retaining enough income to continue investing in making USDC a global utility infrastructure—"giving away all revenue will only starve the infrastructure."

Third, although the alliance governance model is attractive, its track record in scalability and product agility is extremely poor. Large corporate group coordination is poor, incentives are inconsistent, and often self-interest stifles alliance operations. Circle had previously attempted a similar model in the early days of USDC, and even on a small scale, it faced infinite challenges. Small, focused strategic partnerships and independently driven business relationships almost always prevail.

Allaire also made it clear that Circle's stablecoin partnership with Coinbase remains strong, with both parties seeing significant opportunities to expand the USDC network. He is optimistic about the overall growth of the stablecoin ecosystem, welcomes OUSD to join, and revealed that Circle is continuously expanding its collaboration with dozens of other stablecoin issuers through platforms such as Arc, CCTP, CPN, StableFX, and Agent Stack, even though some of these partners compete with Circle in other business areas.

Yesterday evening, Open Standard announced the launch of Open USD, a new stablecoin supported by over 140 companies including Visa, Stripe, Mastercard, BlackRock, and Coinbase. According to BIT price data, Circle's stock price plummeted over 16% on Tuesday as a result, but is currently showing a 1.55% pre-market rebound.