Stablecoin Market Disruption: Open Standard’s Yield-Sharing Model

The stablecoin market is on the brink of a significant disruption with the upcoming launch of Open Standard’s Open USD (OUSD) stablecoin, which could potentially pose an existential threat to Circle’s USDC. The OUSD stablecoin is backed by over 140 partners, including major players such as Visa, Mastercard, Stripe, American Express, Coinbase, BlackRock, Google Cloud, BNY, IBM, DoorDash, and Fireblocks.

Yield-Sharing Model: A New Approach to Stablecoins

The OUSD stablecoin’s model is based on a yield-sharing approach, where reserve income is shared with partners that distribute the stablecoin, minus a management fee. This approach differs from the traditional stablecoin model, where the issuer keeps the reserve income. is yield-sharing model is a key strength of OUSD, as it allows participating institutions to mint and redeem the token without volume limits while sharing reserve income across the network after operating costs.

The OUSD stablecoin is expected to launch in the second half of this year, and its impact on the stablecoin market is still uncertain. However, Nolan notes that the depth of Circle’s network of exchanges, decentralized finance (DeFi) venues, payments service providers (PSPs), and bank custody, which the company has been building for nearly a decade, could help Circle emerge from this challenge stronger if OUSD fails to gain ground.

Open Standard’s Consortium: A New Player in the Stablecoin Market

Open Standard announced OUSD on June 30, stating that the dollar-backed stablecoin is backed by over 140 companies from traditional payments and cryptocurrency-native ecosystems. The consortium aims to challenge the concentrated economics of incumbent stablecoin issuers, including Circle, by allowing participating institutions to mint and redeem the token without volume limits while sharing reserve income across the network after operating costs.

However, the launch of OUSD also raises questions about who ultimately decides when the interests of the consortium diverge from those of its members. Additionally, the fact that Open Standard’s infrastructure is nearly all Stripe has raised concerns about the independence of the consortium. Despite these concerns, the launch of OUSD is seen as a serious and ambitious bet aimed at a real problem, placed by a company with a stake in every layer of the rail and enough distribution to seed adoption before the coin even goes live.

Implications for the Stablecoin Market

The launch of OUSD has significant implications for the stablecoin market, particularly for Circle’s USDC. If OUSD gains traction, it could potentially disrupt the dominance of USDC and other incumbent stablecoins. However, if OUSD fails to gain ground, Circle could emerge from this challenge stronger, having demonstrated its ability to adapt to changing market conditions.

The yield-sharing model of OUSD also raises questions about the future of stablecoins and the role of reserve income in the ecosystem. As the stablecoin market continues to evolve, it is likely that we will see new and innovative approaches to stablecoin design and management.

What Should You Do About Open USD?

As the launch of OUSD approaches, investors and users of stablecoins should be aware of the potential implications of this new stablecoin. While the yield-sharing model of OUSD may offer attractive benefits, it is essential to carefully consider the risks and uncertainties associated with this new stablecoin. Additionally, users should be aware of the potential impact of OUSD on the stablecoin market as a whole and the potential for disruptions to the dominance of incumbent stablecoins.

Ultimately, the success or failure of OUSD will depend on a variety of factors, including the ability of Open Standard to build a robust and reliable network, the willingness of users to adopt the new stablecoin, and the response of incumbent stablecoin issuers to the new competition. As the stablecoin market continues to evolve, it is essential to stay informed and adapt to changing market conditions.

The launch of OUSD is a significant development in the stablecoin market, and its impact will be closely watched by investors, users, and regulators. As the market continues to evolve, it is essential to consider the potential implications of new stablecoins and the role of reserve income in the ecosystem.

Can the yield-sharing model of OUSD disrupt the dominance of incumbent stablecoins? What are the potential implications of OUSD for the stablecoin market? How will the launch of OUSD affect the pricing and adoption of stablecoins? These are just a few of the questions that will be answered as the stablecoin market continues to evolve.

Stablecoin Investment Risks – Disclaimer

This article does not replace professional advice. Outcomes may vary by individual circumstances. Consult a qualified financial advisor before making investment decisions. The information provided is for general purposes only and is not intended to promote or recommend any specific investment product or strategy.