Ripple-backed OpenUSD may have a hard time challenging USDT and USDC, even with big corporate names behind it, because stablecoin markets rely on liquidity, trust, sideways usage and daily platform integration, Cathie Wood said.
ARK says stablecoin moats are built on usage
According to ARK Invest CEO, stablecoins are similar to cash networks that evolve with increasing adoption by user bases, exchanges, wallets, and payment companies. She added that USDT and USDC have already established strong network effects in cryptocurrency trading, payments and DeFi.
In a Research noteARK Invest Digital Assets Manager, Lorenzo Valente, noted that the odds of OUSD replacing the two largest stablecoins are low. In his blog post “Why It’s Harder to Kill USDT and USDC than Twitter Thinks About Cryptocurrencies,” Valiente also warned that many market participants may be overly optimistic about the strength of OUSD’s launch.
Open Standard, led by Stripe co-founder Zach Abrams, introduced the OUSD service last month. The stablecoin is expected to be released later this year and aims to reduce adoption costs by eliminating issuance and redemption fees, sharing the majority of reserves with participants, and establishing independent governance.
More than 140 companies in the payments, banking, cryptocurrency and technology sectors have been linked to the project, such as Ripple, BlackRock, Visa, Stripe, Google, Coinbase, DBS and OKX. However, some South Korean companies, such as Samsung Electronics and Shinhan Financial Group, reported that they did not have an administrator Agreement to participate in the consortium.
OUSD faces questions about liquidity and incentives
Stablecoin network effects “don’t arise through a long list of slogans,” Valente said. He said they derive from liquidity, custom, collateral acceptance, market depth, settlement flows, integration, and the risk of causing disruption to operating systems.
His analysis also challenged the idea that OUSD would be able to develop a new revenue model for users. He said it is expected to be OUSD GENIUS Code compliantWhich means it cannot share the revenue directly with stablecoin holders. The model has been called the “reserve economy” and non-payment to end users.
Valente said Binance serves as a prime example of how exchanges may choose not to change forks when another stablecoin has better reserve economics. According to him, Binance has approximately US$45 billion in USDT, Bybit has approximately US$4 billion, and OKX has approximately US$9 billion.
He explained that USDT is still linked to the trading process on Binance because it is used as a quote asset, collateral asset and unit of account by traders. If they had “spare cash” from another stablecoin, “it would have to be balanced against the risk of hurting a larger business,” Valente said.
Circle CEO Jeremy Allaire, like ARK Invest CEO Cathie Wood, has also done so previously motive USDC after the announcement of OUSD. He noted that USDC has global liquidity, developer integration and regulatory compliance, but questioned the feasibility of returning the bulk of profits to partners on a large scale. Such a system could “starve” the infrastructure, Allaire said.
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