Layer One: Could Open USD really threaten the USDT-USDC duopoly?

Welcome to Layer One: the newsletter and podcast on the intersection of crypto and the real world. Hosted by The Block's Kelvin Sparks and John Wu, President of Ava Labs, Layer One brings you inside the institutional conversations driving blockchain forward.

In our latest episode, we were joined by Stani Kulechov, Founder of Aave Labs, to discuss institutional DeFi, the GHO stablecoin, and Aave's vision for the future of onchain lending.

In this week's newsletter, we're taking a look at the future of the $300 billion stablecoin market, and whether the newly announced OUSD really poses a threat to the incumbents.

Open USD presents a credible challenge to the USDT-USDC duopoly, but are fears over Circle’s future overblown?

Last week, Deloitte released its Stablecoin Playbook: a primer on the current state of the stablecoin market, aimed at enterprises and institutions. Produced in partnership with Ava Labs, the publication asserts that “the global financial system is standing at the threshold of a fundamental reset,” as stablecoins and tokenization rewire its inner workings.

With a wide variety of major companies and institutions advancing pilot programs — including JP Morgan, Hyundai, and Singapore’s central bank — stablecoins are now fast approaching the end of their proof-of-concept stage.

Perhaps the most significant signal of this was the announcement of Open USD (OUSD) on June 30. This new stablecoin, slated for launch later in 2026, is supported by a consortium of over 140 major firms across the crypto, banking, and fintech sectors. This includes leading payment processors — Visa, Mastercard, American Express and Stripe — and global TradFi institutions such as BlackRock and Standard Chartered. These partners will share in the revenue generated from the reserves of Open Standard, the entity managing the issuance of OUSD.

The stablecoin space may now be on the cusp of a seismic shift, meaning the established incumbents could see their dominance eroded.

Currently, the de facto USDT-USDC duopoly accounts for over 85% of the stablecoin market’s $300 billion value. USDT accounts for approximately $189 billion, while USDC sits at $72 billion. Citigroup estimates that the total market will grow rapidly to between $1.9 trillion and $4 trillion by 2030, meaning a 530% increase to match its base case.

It’s unclear how much of that growth Open USD aims to capture; Open Standard has set no target for the coin’s launch market capitalization, preferring that it scale organically with demand from the consortium’s members. However, with the backing of the world’s largest crypto exchanges, financial institutions, and payment processors, it’s reasonable to speculate that OUSD could carve out a substantial share.

As the preferred stablecoin for regulated finance in the United States, Circle’s USDC has acted as a bellwether for this confidence shock. Following the OUSD announcement, the company’s stock (CRCL) dropped roughly 17% within a single day, with multiple analysts subsequently slashing price and earnings targets for the company.

Concerns around Circle’s future are amplified by the fact that Coinbase, a joint founder of USDC and the stablecoin’s largest distribution partner, is also a member of the Open Standard consortium. Likewise, Visa’s own stablecoin pilot program, which reached a $7 billion annualized run rate in April, made use of USDC for settlement.

With such significant overlap between Circle’s existing partners and the Open Standard roster — Visa, Coinbase, BlackRock, Stripe, and others — the concern is that much of that stablecoin activity could be siphoned out of USDC and into OUSD.

Some argue that these fears are overblown, as USDC’s ubiquity, network effects, and trillion-dollar monthly transaction volume will make it tough to simply unseat. This is the thesis of analysts at Bernstein, who characterized Circle’s recent woes as a market overreaction rather than an existential threat. The firm did, however, slash its CRCL price target from $190 to $140, conceding that a period of heightened competition could be on the horizon.

The more likely scenario is that banking, distribution, and enterprise partners will integrate with multiple coins and networks. This is why Visa itself has explicitly declined to pick a side. On an earnings call earlier this week, CEO Ryan McInerney reiterated the company’s stablecoin-agnostic stance, envisioning its blockchain-powered future as “multi-coin, multi-chain.”

Podcast Recap: Stani Kulechov on Aave V4, Avalanche, and why RWAs hit $100B this year

In the Headlines: The stories driving the conversation this week

• Circle has acquired the IBM blockchain patent portfolio, becoming the largest holder of blockchain patents in the United States. The deal, concluded for an undisclosed amount, saw the stablecoin issuer secure the rights to over 680 patent families and almost 1,000 issued patents across blockchain, financial services, and other sectors. This expansion of its technological arsenal could provide a defensive moat for Circle and USDC, when credible challengers like OUSD enter the market. 
• Coinbase has launched services allowing merchants to accept stablecoin payments from AI agents. Powered by the x402 payments protocol — an open standard developed to allow AI agents to transact with each other and traditional web businesses — the update will allow Coinbase Business customers to offer their services within the emerging machine economy. In an interview with The Block, Head of Coinbase Business Siddharth Coelho-Prabhu predicted the agentic economy will emerge as “one of the big story arcs of the internet.”
• Tokenized treasuries on Avalanche topped $843 million this week, with BlackRock’s BUIDL driving a boom in RWA value. BlackRock’s flagship tokenized money market fund was launched on the network in 2024, with new issuance ramped up significantly in 2025. Avalanche is now the second largest venue for the fund, home to $634 million of its total $2.64 billion in AUM (up over 50% within the past 30 days).

Top of the Charts: USDT and USDC still account for the vast majority of stablecoin value across major L1s

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