Author: Jeremy Allaire, Circle CEO
Compiled by: Jiahuan, ChainCatcher
Our investor community has raised many questions about OUSD and wants to hear our perspective, so I want to share my views directly here for reference.
Stablecoin networks are a platform and network effects business that takes a long time to build, and market structures often tend towards a winner-takes-all outcome, similar to other internet platform-type infrastructure markets. Several layers are driving this.
First, stablecoin networks essentially act as public protocols and software layers on the internet. The strength of their network depends on the number and breadth of applications and services connected to it. Each time a developer or service provider connects to the network, it brings more network effects.
This attracts more developers, adds more utility, and brings further network effects. This, in turn, drives demand for the digital currency itself, which further reinforces these network effects through liquidity network effects.
Today, we have achieved this at massive scale with the USDC network: tens of thousands of services are connected to our network. This not only brings tremendous practical value to each application but also greatly benefits all users from this reach and interoperability. This further strengthens the preference for USDC among users and developers.
We have invested nearly a decade in building this ecosystem, and this process is now accelerating as mainstream institutions connect to the network, linking their customers and users.
We are also expanding and strengthening this network by building a software stack, such as protocols like CCTP and Gateway, which enhance interoperability, security, and liquidity globally. This broadens the reach for application developers, allowing them to easily tap into existing liquidity and network effects.
Today, we see this software stack being widely adopted by various chains, permissioned L2s, networks led by governments, and more.
The second layer is the network effect of liquidity. This is fundamental. Liquidity begets more liquidity.
For a stablecoin to achieve scale and utility, it must have high liquidity, both in primary markets (e.g., covering all major global financial market centers with world-class direct bank connectivity) and in secondary markets, meaning it is accessible and tradable in every region globally, for both retail and institutional clients, against every fiat instrument.
Those who want to acquire and transfer value need to be able to easily move in and out of this digital currency. We have invested nearly a decade in building this liquidity, and it is now deeply embedded across exchanges, DeFi venues, and numerous channels like payment service providers, payment companies, and regional exchanges.
Building these liquidity network effects also involves constructing a global regulatory infrastructure to ensure the stablecoin can be used under different regulatory regimes worldwide.
Today, USDC is among the top three globally liquid digital assets, with a sharp drop-off after that. BTC, USDT, and USDC have exceptionally outstanding liquidity.
The nearest other dollar stablecoins are roughly ten times smaller in scale, and their liquidity is often concentrated on the promoted order books of a particular exchange, whereas USDC's liquidity is widely dispersed across dozens of different trading venues. Building this liquidity has been a near-decade-long effort, and we continue.
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 major global stablecoin usable across all of Europe and Japan), and increasingly, regulatory frameworks for stablecoins are being established. Circle is at the forefront, ensuring USDC is officially recognized, registered, licensed, and accepted 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 nearly 24/7 across global markets and banking systems. This global effort is a massive investment we've made over many years.
The result of all this investment by Circle and our global ecosystem of thousands of partners is this: providing the world with the most trusted, most accessible digital dollar infrastructure, which any user, developer, or business can freely and easily access. And we have no intention of slowing down.
All this compounds and is reflected in the data. According to third-party analytics firm Artemis, which tracks stablecoin adoption, in Q1 2026, USDC processed nearly $30 trillion in on-chain transactions, accounting for 80% of all dollar stablecoin on-chain transactions. USDT processed the remaining 20%.
All other dollar stablecoins combined processed 0% of total transaction volume (i.e., less than 0.5%). Other stablecoins may have some circulation, but most of that comes from promotions and incentives, with actual usage extremely limited, precisely because their liquidity and network utility are severely limited.
However, my thinking about the competitive landscape isn't just about the strengths of our network but also includes some considerations about the nature of any new initiative itself.
Several viewpoints and positioning have been shared externally about how a product like OUSD could do better than one like USDC.
1) Free minting and burning. This argument posits that existing stablecoins charge burning (redemption) fees, and payment companies shouldn't pay for this (even though the entire payment industry is built on charging small basis point fees at various network entry and exit points).
Some structural market realities have formed around the fact that 'certain stablecoins charge high redemption fees and have limited redemption channels.' The impact is that stablecoins with strong redemption channels, good liquidity, and no fees become exit paths for competing stablecoins.
Saying you'll provide unlimited, free redemptions sounds easy, but market realities will likely force you to adopt other approaches. This problem is solvable, and Circle addresses it through contractual mechanisms rather than a blanket fee waiver.
2) Everyone wins, everyone shares. This sounds good in principle, but the realities of markets and market opportunities are quite different. Today, Circle already shares a large portion of its revenue with its distribution partners, and we continue to aggressively expand partnerships with leading companies across market segments.
However, we also retain a significant portion of revenue to invest in the massive market infrastructure that makes USDC the robust and valuable foundational tool the world can build on. Sharing all revenue starves the infrastructure, leading to systematic underinvestment and ultimately keeping your platform small-scale.
Furthermore, Circle believes the future stablecoin market is likely to be orders of magnitude larger than today. We are actively bringing partners into the USDC ecosystem through diverse and growing partnership models, covering exchanges, custodians, payment companies, asset issuers, and more.
We are excited to continue building with a 'big tent' mentality, allowing the entire ecosystem to grow the pie together.
3) A consortium where everyone has a voice. Perhaps my view is a bit pessimistic, but consortium-based products have a really poor historical track record in achieving scale, product-market fit, or even just basic product agility. While some financial consortia that operate infrastructure do exist, their slowness is predictable.
Getting a large group of big companies together leads to poor coordination, misaligned incentives, slow progress, and little room for truly enduring innovation and competitiveness. They also often starve the consortium itself operationally, pursuing their own vested interests.
Early on with USDC, we actually tried this approach, and even with just a small group, we encountered endless difficulties and complexities.
Tighter, smaller strategic collaborations and commercial partnership arrangements with product and platform builders who can independently move forward almost always outperform large consortia in competition.
But when such consortia form, often everyone feels they should get their logo on the list, make a statement of support, and loudly proclaim openness. Yet, typically, these companies turn around and let their business units make the best decisions for their clients, which often means partnering with the market leader and building lasting win-win relationships.
There has also been much commentary externally about Circle's partnership with Coinbase and what it all means. Our partnership with Coinbase on stablecoin remains as strong as ever, and I believe both sides see a huge opportunity to expand the USDC network in the future.
A final point: Circle has always been committed to supporting a wide variety of products and infrastructure, even if, in other areas of our business, we may compete with certain aspects of those partners' products. In the case of OUSD, we maintain close partnerships with many of its founding members, and we expect these members to continue being important partners and customers of USDC.
At the same time, as Circle continues to enrich our product and platform matrix, expanding into areas like Arc, CCTP, CPN, StableFX, Agent Stack, and more, we are also continuously expanding cooperation with dozens of other stablecoin issuers, helping them issue on Arc, leverage our interoperability infrastructure, gain wallet support, and become settlement and forex options on CPN and StableFX.
We are firmly optimistic about the growth of the stablecoin ecosystem and welcome OUSD as a new member of this community!
