Circle CEO responds to OUSD's challenge: Stablecoins are a winner-takes-all business, and we will not slow down

Author: Jeremy Allaire, Circle CEO

Compiled by: Jiahua, ChainCatcher

Our investor community has raised many questions about OUSD and wants to hear our views, so I would like to share my thoughts directly here for everyone's reference.

Stablecoin networks are a business of platforms and network effects, which take a long time to build. The market structure often tends toward winner-takes-all, similar to other internet platform-based infrastructure markets. Several layers are driving this.

First, stablecoin networks essentially serve as public protocols and software layers on the internet, and their network strength depends on the number and breadth of applications and services accessing this network. Every time a developer or service provider connects to the network, it brings more network effects.

This attracts more developers, increases utility, and brings more network effects. This, in turn, drives demand for the digital currency itself, further reinforcing these network effects through liquidity network effects.

Today, we have achieved this on a massive scale through the USDC network: thousands of services connect to our network, which not only brings tremendous utility to each application but also greatly benefits the overall users from this coverage and interoperability. This further strengthens the preference of users and developers for USDC.

We have spent nearly a decade building this ecosystem, and now, as mainstream institutions connect to the network and link their customers and users, this process is accelerating.

We are also expanding and reinforcing this network by building a software stack, such as protocols like CCTP and Gateway, which enhance interoperability, security, and liquidity globally. This expands the reach of application developers, allowing them to easily access existing liquidity and network effects.

Today, we see this software stack being widely adopted by various chains, permissioned L2s, government-led networks, and more.

The second layer is liquidity network effects. This is fundamental. Liquidity brings more liquidity.

For a stablecoin to achieve scale and utility, it must have high liquidity, which includes liquidity in the primary market (for example, covering all major financial market centers globally, with world-class bank direct connectivity liquidity) and liquidity in the secondary market, meaning it can be accessed and traded in every region globally, for both retail and institutional clients, across every fiat currency tool.

Those who want to acquire and transfer value need to be able to easily enter and exit this digital currency. In this regard, we have invested nearly a decade building this liquidity, which is now firmly embedded in exchanges, DeFi venues, payment service providers, payment companies, regional exchanges, and many other channels.

Establishing these liquidity network effects also involves building a global regulatory infrastructure to ensure that this stablecoin can be used under different regulatory regimes around the world.

Today, USDC is one of the top three digital assets by global liquidity, with a sharp drop after that. BTC, USDT, and USDC have exceptionally outstanding liquidity.

The closest other dollar stablecoins are about ten times smaller in scale, and their liquidity is often concentrated on the promotional order books of a single exchange, while USDC's liquidity is widely dispersed across dozens of different trading venues. Building such liquidity has been a nearly ten-year effort, and we are still continuing.

The third layer of network strength comes from deep integration with policy and regulatory environments. In many cases, this requires years of effort to obtain licenses (for example, USDC is currently the only large global stablecoin that can be used across Europe and Japan), and more and more regulatory frameworks targeting stablecoins are being implemented, with Circle at the forefront, ensuring that USDC receives official recognition, registration, licensing, and acceptance in the world's most important markets.

Behind this is the work of building a global banking, reserve management, funding, and liquidity management system that can operate almost around the clock in global markets and banking systems. This globalization effort represents a significant investment we have made over the years.

Everything that Circle and our global ecosystem of thousands of partners have invested ultimately results in providing the world with the most trusted and accessible digital dollar infrastructure, allowing any user, developer, or business to freely and conveniently access this infrastructure. And we do not intend to slow down.

All of this will continuously compound and be reflected in the data. According to data from third-party analytics firm Artemis, which tracks stablecoin adoption, in the first quarter of 2026, USDC processed nearly $30 trillion in on-chain transactions, accounting for 80% of all on-chain transactions of dollar stablecoins. USDT processed the remaining 20%.

The total transaction volume processed by all other dollar stablecoins combined is 0% (i.e., less than 0.5%). Other stablecoins may have some circulation, but most of it comes from promotions and incentives, with actual usage being extremely limited due to their liquidity and network utility being very constrained.

However, my thoughts on the competitive landscape are not just about the strengths of our network but also include considerations regarding any new initiatives themselves.

Regarding how products like OUSD can do better on the foundation of products like USDC, several viewpoints and positions have been shared externally.

1) Free minting and burning. This claim suggests that existing stablecoins charge redemption fees, and payment companies should not have to pay for this (even though the entire payment industry is built on charging small basis point fees at various entry and exit points of the network).

There are some structural market realities formed around the fact that "certain stablecoins charge high redemption fees and have limited redemption channels." The impact of this is that stablecoins with strong redemption channels, good liquidity, and no fees become exit channels for competing stablecoins.

Claiming to offer unlimited, free redemptions sounds easy, but market realities are likely to force you to adopt other practices. This issue can be addressed, and Circle handles it through contractual mechanisms rather than a blanket waiver of fees.

2) Win-win for everyone, profit-sharing. This sounds good in principle, but the reality of the market and market opportunities is quite different. Today, Circle has already shared most of its revenue with its distribution partners, and we are continuously expanding our collaborations with leading companies across various market sectors.

However, we also retain a significant portion of revenue for investment in the massive market infrastructure, which is precisely what enables USDC to be a powerful and valuable foundational tool upon which the world can build. Distributing all revenue would starve the infrastructure, leading to systemic underinvestment and ultimately keeping your platform confined to a small scope.

Additionally, Circle believes that the future market size for stablecoins is likely to be several orders of magnitude larger than today. We are actively bringing partners into the USDC ecosystem through diverse and continually increasing collaboration models, covering exchanges, custodians, payment companies, asset issuers, and more.

We are pleased to continue building with an "inclusive" mindset, allowing the entire ecosystem to grow the value together.

3) An alliance where everyone has a voice. Perhaps my view is a bit pessimistic, but alliance-type products have historically performed poorly in achieving scale, product-market fit, or even basic product agility. While there are indeed some financial alliances operating infrastructure, their slow actions are predictable.

A large group of big companies coming together often results in poor coordination, misaligned incentives, and slowed progress, leaving little room for true lasting innovation and competitiveness. They often also starve the alliance itself at the operational level for their own interests.

In the early days of USDC, we actually tried this approach, and even with just a small group, we encountered endless difficulties and complexities.

Smaller, tighter strategic collaborations, as well as commercial arrangements with product and platform builders who can independently move forward, almost always outperform large alliances in competition.

However, when forming such alliances, everyone often feels they should put their logo on the list, make a statement, and loudly promote openness. But usually, these companies will turn around and let their business units make the best decisions for customers, which often means collaborating with market leaders to establish lasting win-win relationships.

There has been much commentary about Circle's collaboration with Coinbase and what it all means. Our collaboration with Coinbase on stablecoins remains as solid as ever, and I believe both sides see the tremendous opportunity to expand the USDC network in the future.

Lastly: Circle is always committed to supporting various different products and infrastructures, even if there may be competition with certain aspects of these partner products in other areas of our business. Regarding OUSD, we maintain close cooperation with many of its founding members, and we expect these members to continue being important partners and clients of USDC.

At the same time, as Circle continues to enrich our product and platform matrix, expanding into areas such as Arc, CCTP, CPN, StableFX, Agent Stack, and many others, we are also continuously expanding our collaborations with numerous other stablecoin issuers, numbering in the dozens, helping them issue on Arc, utilize our interoperability infrastructure, gain support from our wallets, and become settlement and forex options on CPN and StableFX.

We firmly believe in the growth of the stablecoin ecosystem and welcome OUSD as a new member of this community!