Woofun AI reports that the stablecoin sector has pivoted from competing on underlying technologies to a direct conflict over the rights to distribute network profits, a shift crystallized by the formation of the Open USD (OUSD) alliance. Written by Oluwapelumi Adejumo and compiled by Saoirse for Foresight News, the analysis highlights how platforms holding user traffic now demand a larger slice of the interest generated by reserve assets, which historically flowed exclusively to issuers. This new stablecoin, developed by over 140 financial, technology, and crypto companies including Coinbase, Visa, Mastercard, Stripe, BlackRock, Google, and others, introduces a mechanism to allocate most reserve profits directly to the distribution platforms responsible for acquiring users. The project offers free minting and redemption services to businesses, fundamentally altering the economic incentives that have long favored issuers like Circle and its USDC token.

For Circle, the issuer of USDC, the most immediate threat within this new alliance is undoubtedly Coinbase, the very exchange that facilitated USDC's growth into a dominant dollar-based stablecoin. Data compiled by Woofun AI shows that Coinbase holds more than 25% of all USDC in circulation on its platform, representing an average value of around $19 billion.

Furthermore, Coinbase's Layer 2 network, Base, handled 62% of all on-chain stablecoin transactions globally in the first-quarter of 2024. This massive market share means Coinbase's support for OUSD is a strategic pivot rather than a superficial endorsement, as the exchange turns to invest in a competing system while disputes over profit distribution intensify. In 2024, Circle paid Coinbase $908 million under an earnings-sharing agreement, a figure that proves Coinbase is an essential channel for USDC liquidity. Public earnings reports indicate that throughout 2025, Coinbase's total revenue related to stablecoins amounted to about $1.35 billion, accounting for 19% of the company's overall revenue. With the current three-year contract with Circle set to expire in August 2026, Tiger Research notes that participating in OUSD negotiations gives Coinbase significant bargaining power. Brian Armstrong, Coinbase's CEO, remained brief in public statements, saying only that the company "looks forward to promoting the adoption of stablecoins and transforming the global financial system," yet the move signals a consensus that platforms controlling distribution networks no longer wish to see the vast majority of interest income flow solely to issuers.

The official launch of the OUSD alliance has directly shaken the existing market structure for stablecoins, whose total market cap exceeds $320 billion. For years, issuers like Circle and Tether maintained a high-profit model where interest generated by billions of dollars in reserves went entirely to them.

However, as stablecoins evolve into foundational infrastructure for global liquidation and cross-border payments, channel companies are demanding a complete overhaul of this system. OUSD addresses this by eliminating regular minting and redemption fees and returning the vast majority of reserve interest to distribution partners. The market responded immediately: on the day the alliance was announced, Circle's stock price plummeted by 16%, reflecting investor concerns that the core business partnership between Circle and Coinbase could break at any time. While the previous cooperation was mutually beneficial, growing differences in interests have intensified, with channel distribution now holding more influence than simple token issuance. By becoming an initial member of OUSD, Coinbase gains a powerful alternative asset just as its distribution agreement with Circle approaches a critical milestone.

Circle does not agree with the notion that channel partners can easily replicate existing mature networks, and Jeremy Allaire, Circle's CEO, has stepped forward to defend the USDC system. In an extensive article published on X, Allaire argued that stablecoins possess platform characteristics and network effects that will inevitably lead to a "dominant few" scenario. Citing data from the Artemis platform, he stated that in the first quarter of 2026, the total volume of USDC transactions on-chain was nearly $30 trillion, accounting for 80% of all dollar-based stablecoin transactions on major public chains. Allaire emphasized that "Today, USDC ranks among the top three most liquid digital assets globally, with a huge gap in liquidity between it and the assets that follow." He noted that BTC, USDT, and USDC all have top-tier liquidity, whereas the liquidity of other dollar-based stablecoins is only one-tenth of theirs.

Moreover, he pointed out that competitor liquidity is mostly concentrated in the market-making orders of single exchanges, while USDC's liquidity is spread across dozens of different use cases. Allaire believes it has taken nearly a decade to build this liquidity ecosystem, creating an insurmountable operational moat that covers all major global financial centers, various decentralized finance protocols, and global payment service providers. Regarding OUSD's claim of zero fees, Allaire raised doubts, suggesting that while zero-fee marketing sounds attractive, it often requires a more mature and structured business plan in reality. He revealed that Circle has already reduced transaction costs by signing customized contracts with enterprise payment partners rather than simply eliminating all fees outright.

Allaire further questioned whether a large corporate alliance can function efficiently in the fast-changing world of digital assets, commenting that large alliances in the traditional finance industry have generally been "slow to progress, with predictable outcomes." He argued that it is difficult for alliances formed by many large companies to coordinate all parties, as their differing interests make it hard to move forward, making it almost impossible to produce innovative results with long-term competitiveness. Allaire mentioned that Circle tried a small-scale alliance structure in the early days of USDC development but found that a streamlined, independently managed strategic partnership model was far more efficient than a committee-led alliance network. From an operational cost perspective, he warned that if all reserve profits were distributed to channels, stablecoin operators would have no funds left for critical infrastructure investments. These necessary expenditures include applying for global compliance licenses, implementing robust risk controls, and managing treasury funds around the clock, all of which are essential for maintaining the stability and trust required for a global payment system.

Market analysts remain cautious, noting that even with the backing of many well-known companies, the OUSD alliance will face severe challenges in converting its membership into real on-chain liquidity. Lorenzo Valente, head of digital asset research at ARK Invest, pointed out that capital markets and crypto exchange trading systems have already been optimized around mature trading pairs like USDT and USDC. Valente wrote, "There are no successful precedents of alliances formed by hundreds of competing companies in this industry." He highlighted that Circle and Tether can independently plan product updates and implement services without having to compromise with any partners, whereas an alliance involving multiple competing companies will see extremely slow decision-making. Valente also flagged regulatory and antitrust risks, noting that while Circle and Tether spent years obtaining multiple compliance licenses and establishing regulatory communication channels, OUSD brings together leading global card organizations, asset management firms, and large banks, making it a prime target for antitrust regulators. It remains uncertain whether the initial members of OUSD will remain united in the long term, especially as Stripe recently acquired the stablecoin infrastructure company Bridge to continue building its own financial services ecosystem. Major banks are testing their own tokenized deposit products, and Ripple is launching its own stablecoin. These companies, which control vast distribution channels, are developing multiple digital asset product lines simultaneously and will not exclusively drive traffic to OUSD. Kayla Phillips of blockchain venture capital firm Hivemind commented, "How can so many institutions coordinate their governance? For efficient operation, it's impossible to give equal decision-making power to 140 companies." She questioned how the alliance can motivate companies to stay and contribute to operations if they cannot join the core governance layer.

The emergence of OUSD reflects a broader trend where the stablecoin industry is gradually splitting, with the underlying liquidation layer likely to diversify. Large companies no longer view stablecoins as standalone products for ordinary consumers but rather as standardized, reusable backend liquidation tools. For Circle, retaining market share will require accelerating the promotion of cross-chain transfer protocols like CCTP and value-added development tools such as institutional embedded wallets. These initiatives aim to ensure that the software ecosystem offers benefits beyond just profit sharing, thereby reinforcing the issuer-led model against the rising tide of channel-led alternatives. The strategic divergence is clear: platforms are treating stablecoins as backend tools to be integrated into their broader financial stacks, rather than as consumer-facing products to be marketed directly.

Ultimately, the core competition in the stablecoin sector has shifted from a race in underlying technologies to a direct struggle over the rights to distribute network profits. Channel platforms are now banding together to reclaim the interest income generated by their user traffic, challenging the traditional model where issuers captured the lion's share of returns. This marks a definitive split between issuer-led models and channel-led profit reclamation, setting the stage for a prolonged battle over who controls the financial infrastructure of the future. The outcome will determine whether the network profits flow to the entities that issue the tokens or to the channel platforms that drive the user traffic and generate the interest income.