Woofun AI reports that Lorenzo Valente, Research Director at ARK Invest, challenges the market hype surrounding OUSD, asserting that the alliance of 150 companies cannot displace USDT or USDC due to entrenched network effects. While the launch of OUSD has generated significant speculation that @circle is in dire straits and that a coalition spanning payments, fintech, banking, crypto infrastructure, and consumer technology will crush competitors, Valente contends this view severely overestimates the project’s viability. The core argument rests on the misunderstanding of stablecoin network effects, which are not defined by partner logos but by liquidity, usage habits, collateral acceptance, integration depth, brand recognition, market depth, settlement flow, and the psychological resistance to disrupting existing operating systems. Consequently, the liquidity moats of USDT and USDC remain far stronger than market participants acknowledge, making the alliance structure difficult to succeed in a market that has already formed a duopoly. This skepticism is rooted in the observation that @tether and @circle are both severely misunderstood by those who believe profit-sharing mechanisms alone can drive adoption.

Structurally, the regulatory landscape imposes hard constraints on the OUSD model that limit its appeal to end-users. OUSD will comply with the GENIUS Act’s regulatory requirements, which explicitly prohibits direct profit sharing with users. This reality contradicts the narrative that Circle fails to distribute profits while OUSD succeeds; in fact, Circle likely shares the highest proportion of profits with platform providers among all issuers, indirectly benefiting users. The OUSD model does not create a new profit product for holders but rather shares reserve income with the platforms and businesses that distribute and use the stablecoin. The strongest argument for OUSD is that alliance members have a strong incentive to deeply integrate it to earn revenue sharing. Assuming an economic model similar to previous alliances, the operating company Open Standard would charge a management fee of 25 basis points, while each participant retains all net interest margin (NIM) generated from their OUSD holdings on their platform, network, or protocol. On paper, this deal appears attractive, but it overlooks the critical fact that these companies already accumulate value through other means, often relying precisely on the liquidity and network effects of USDT, USDC, other stablecoins, or fiat currency itself. Only when chasing net interest margins does not jeopardize a much larger source of income does the NIM of stablecoin reserves become truly attractive.

To illustrate this dynamic, Binance serves as the definitive case study. As the largest exchange in the industry by a wide margin, Binance originally held its own branded stablecoin, BUSD, with a supply that once approached $23 billion.

However, in February 2023, the New York State Department of Financial Services (NYDFS) ordered the issuer Paxos to shut down the product, eliminating Binance’s native stablecoin option. Looking at the three major exchanges in Asia, the current dominance of USDT is stark: @binance holds about $45 billion in USDT, @Bybit_Official holds about $4 billion, and @okx holds about $9 billion. Binance has always been, and remains, Tether’s stronghold and ace asset. USDT continues to dominate as the pricing currency in the offshore exchange ecosystem, whether for buying large amounts of BTC, ETH, SOL, or opening and closing contract positions. USDT is deeply embedded in the deepest order books, the most active trading pairs, the most active derivatives markets, and the daily operations of the most important market makers and traders. This deep integration represents the true network effect that OUSD cannot easily replicate.

Notably, the question arises why CZ, despite holding significant bargaining chips, does not negotiate for a share of USDT profits or replace it with a more aligned stablecoin. The reason is simple: from the perspective of revenue and enterprise value, Binance’s true ace asset is its trading business, which is precisely supported by the liquidity of USDT. Disrupting this liquidity to chase net interest margins would be irrational. The trading business relies on the depth and stability that USDT provides, making any attempt to switch stablecoins a potential threat to the core revenue engine. CZ’s decision not to call Paolo or Giancarlo to ask for a share of USDT profits is not naivety but a calculated recognition that the trading business’s dependence on USDT liquidity outweighs the potential gains from profit sharing. The liquidity provided by USDT is the foundation upon which Binance’s trading volumes and subsequent revenues are built, making it a non-negotiable component of the exchange’s operational strategy.

A more critical variable is the revenue breakdown of Binance, which highlights the magnitude of the trading business. Binance’s global crypto derivatives trading volume accounts for about 40%, averaging $40 billion to $50 billion daily, which annualizes to about $10 trillion to $15 trillion over a cycle. After deducting VIP discounts and BNB rebates, the comprehensive maker/taker fee rate is about 5 basis points. Just this derivatives segment alone generates around $5 billion in revenue. This figure underscores the immense scale of the trading business and the critical role that liquidity plays in sustaining such volumes. The derivatives engine is the core of Binance’s profitability, and any disruption to the liquidity that supports it would have a direct and negative impact on this revenue stream. The reliance on USDT for pricing and settlement in derivatives markets is therefore not incidental but structural to Binance’s business model.

Woofun AI data shows that spot trading and other business streams further reinforce the importance of maintaining existing liquidity structures. Spot trading has a daily average of about $8 billion to $10 billion, annualizing to about $3 trillion, with a comprehensive fee rate of about 15 basis points. This rate is far lower than Coinbase’s retail rates because Binance’s customer base is primarily VIPs and often runs zero-fee promotions, yet it still contributes another approximately $5 billion in revenue. Other businesses, including interest margins from wealth management and lending, margin interest, Launchpool and listing revenues, Binance Pay, staking commissions, and management of "idle funds," add further value. Binance customers have about $46 billion in stablecoins sitting in their accounts, and although Binance does not directly invest this money like a brokerage, the corporate fund pool management and interest-bearing products around this portion of funds are not insignificant in the current interest rate environment. Adding in related revenues from the BNB ecosystem, conservatively estimating this part could contribute another $5 billion to $7 billion. These diverse revenue streams are all interconnected with the liquidity and trust provided by USDT, making any shift away from it a complex and risky endeavor.

The total valuation of Binance further illustrates the rationality of keeping USDT. Very conservatively estimated, Binance’s revenue in a bear market is close to $17 billion to $20 billion, and in a bull market, it could approach $25 billion. With such scale and quality of business, the valuation is likely to exceed $200 billion. The reason Binance can keep over 300 million users coming back is fundamentally because it is the most liquid trading venue on Earth. Binance has $45 billion in USDT on its platform. Assuming it reaches an agreement with OUSD to receive 90% of the profit share, based on an average treasury bond yield of 3.8%, that would be about $1.55 billion a year. While this sounds tempting, risking the disruption of a $25 billion revenue engine for a potential $1.55 billion in additional revenue is a decision only a madman would make. The glue that holds Binance’s trading empire together is USDT, and there is no incentive in the world that could make CZ reconsider which stablecoin to deeply integrate into his business. The potential profit from OUSD is simply not enough to justify the risk of shaking up the core revenue engine.

This dynamic is not just theoretical, as Circle has already attempted to incentivize Binance with USDC. Over a year ago, it was reported that Circle paid Binance a one-time fee of $60 million, plus ongoing monthly incentives tied to USDC holdings. Even so, the supply of USDC on the Binance platform has hardly changed, remaining around $5 billion. This failure demonstrates that financial incentives alone cannot overcome the network effects and operational dependencies established by USDT. People seriously underestimate the network effects these stablecoins bring to the companies that hold them. In most cases, the potential profits are simply not enough to make companies risk shaking up their core revenue engines. For an exchange, stablecoins are not just cash; they are pricing assets, collateral assets, risk management assets, working capital assets, and the accounting unit for millions of traders. Changing this underlying asset is not a zero-cost endeavor, and the costs associated with disruption far outweigh the benefits of profit sharing.

The OUSD alliance also suffers from misaligned interests among its members, which further weakens its potential impact. The alliance gathers companies of vastly different natures that profit from stablecoins in different ways. They can be roughly divided into two types of models. The first type is the "asset scale monetization" model, where companies and protocols rely on idle funds, deposits, or idle capital, and reserve income is directly relevant to them. Lending protocols, wallets, new banks, or exchanges that hold large amounts of customer funds may be very concerned about the net interest margin corresponding to stablecoin supply. The second type is the "turnover monetization" model, where companies are payment networks, processors, remittance companies, and commercial platforms that monetize through transaction flow rather than idle funds. For them, stablecoins are more like a "track" rather than an asset on the balance sheet. Compared to reserve income, they care more about reliability, cost, compliance, speed, coverage, and user experience. @aave and @WesternUnion can bring completely different things to OUSD. A DeFi protocol can help create supply by making OUSD a collateral asset or a liquidity venue with yields. A payment company, on the other hand, is more likely to facilitate the rapid circulation of OUSD within its system, quickly burning it at the end. This circulation is valuable for transaction volume but is entirely different from creating sustainable supply.

This misalignment explains why the alliance structure’s actual influence is much weaker than it appears. Members may all like the idea of sharing profits, but their interests are not aligned. Some members will create supply, while others will only create turnover. Some will deeply integrate, while others will just test the waters. Once the news hype fades, some members may not do anything at all. From a balanced perspective, it is hard to believe that all members will push OUSD with the same intensity. Some will diligently work on implementing it, while others will just reap the benefits. This is the classic dilemma of the alliance model, where collective action is hindered by divergent individual incentives. The outcome of stablecoins is not determined by press releases but relies on long-term, repeated, high-trust usage accumulation in places where real funds flow. This is why USDT remains so powerful, why USDC can maintain resilience and grow rapidly, and why despite the impressive alliance behind OUSD, the road ahead is still much more challenging than the market currently perceives. The real question is not whether OUSD can provide better economic conditions for partners, but whether these economic benefits are worth the risk for partners to disrupt the existing businesses that have already been built around other currencies or stablecoins. In many cases, the answer will be: not worth it.