Open USD Challenges USDC and USDT with Incentive-Based Stablecoin Model

Crypto users spent years making USDC the default dollar of institutional DeFi trading, lending, and settlement, but Open Standard's new Open USD stablecoin is testing whether the dollars users hold can be repaid.

Open Standard says businesses will be able to mint and redeem Open USD for free, at unlimited volume, and that reserve earnings will flow to partner businesses net of a management fee.

The initiative already has over 140 businesses, including Visa, Mastercard, and Coinbase. Open Standard frames the design around scale, earning by default, and a governance board drawn from partner businesses.

That structure amounts to a real turn in how the stablecoin wars have unfolded, from a fight over trust between Tether and Circle, through a compliance fight as GENIUS and MiCA rewarded regulated issuers, into a distribution fight as payment networks and exchanges competed for placement on apps and rails.

Open USD pushes that contest into a new phase, fought over incentives: who gets paid to hold, route, and lend the next digital dollar.

DeFi commentator Ignas argued that crypto-native users built USDC's liquidity, volume, and habit formation, while the economic upside flowed to Circle, Coinbase, and their distribution partners.

Where the money could go

Plasma is the key test of whether that behavior finds a new home, as the network already markets itself around stablecoin spending, saving, sending, and earning through Plasma One, a product that offers instant transfers, global spending, cashback, and balance-based earning.

Open USD is planned to launch with native support on Plasma and Tempo later this year. If that holds, reserve economics built for institutions could reach DeFi users directly through chain-level rewards.

A partner that collects reserve-share income can turn it into liquidity mining on a decentralized exchange, boosted lending rates on Open USD collateral, cashback in a wallet, or routed rebates via a bridge.

Incentive route Who could fund it What users see DeFi impact DEX liquidity mining Chains, protocols, or Open USD partners Rewards for supplying Open USD liquidity Builds trading depth and tighter stablecoin swaps Lending-market boosts Lending protocols or ecosystem funds Higher APY for supplying Open USD collateral Makes Open USD useful in DeFi leverage loops Wallet cashback Wallets, payment apps, or card partners Rewards for spending, holding, or routing Open USD Turns stablecoin adoption into consumer habit Bridge/routing rebates Bridges, chains, or aggregators Lower fees or rebates for moving Open USD Pulls settlement volume across preferred rails Exchange campaigns CEX partners Fee discounts, earn products, or trading rewards Helps Open USD compete with USDC and USDT liquidity

Each of those routes puts the incentive in a partner's hands, which keeps Open USD inside the lines regulators have drawn around stablecoin interest.

The GENIUS Act bars stablecoin issuers from paying interest directly to holders, and the rule leaves open the extent to which affiliates and third parties may offer interest.

Coinbase already pays rewards on USDC balances, and PayPal pays them on PYUSD, a structure banks have criticized as a workaround that pulls deposits out of the regulated banking system.

Open USD's partner list, which already includes wallets, exchanges, and DeFi protocols such as Aave, Morpho, MetaMask, and Trust Wallet, sits inside that same gray zone.

How big the prize is, and how it breaks

The market Open USD is entering is large enough to make that gray zone worth fighting over.

DeFiLlama puts the total stablecoin supply at nearly $312 billion, with USDT at about $184.6 billion and USDC at around $73.9 billion. Citi has raised its 2030 stablecoin forecast to $1.9 trillion in its base case and $4 trillion in its bull case, citing faster growth and a wave of new issuer announcements.

At a 3.7% yield, roughly where short-term Treasury bills trade now, every $1 billion of Open USD in circulation would generate about $37 million a year in gross reserve income before fees and costs.

Circle's first-quarter 2026 results show the pool is already in motion: $653 million in reserve income against $407 million in distribution, transaction, and other costs, a figure Circle says rose due to higher payments to partners.

Circle's 2025 annual filing also discloses that it shares reserve-related income directly with Coinbase to keep USDC liquid and widely used, the same playbook Open USD is now applying to a far larger partner list from the start.

Markets reacted immediately, and Circle shares fell as much as 17% intraday on the day of the announcement, touching a low near $63 as investors priced in a direct hit to the reserve income that funds Circle's business.

The favorable path has Plasma, Tempo, wallets, and DeFi protocols turning their share of reserve income into liquidity campaigns almost immediately. Open USD pools appear on Plasma-native exchanges, lending markets accept the token as collateral, and wallets layer cashback on top of chain-level rewards.

Early liquidity concentrates, so even a modest pass-through rate compounds into a meaningful subsidy, the kind of yield that pulls deposits away from USDC and USDT pools while Open USD stays marketed strictly as a payments token.

The less favorable path leaves reserve income wherever it lands. Payment firms and exchanges treat their share as margin; DeFi incentives remain occasional and temporary; and Open USD circulates mostly within enterprise settlement rails.

Users stick with USDC or USDT, which already carry the liquidity depth and collateral support a stablecoin needs to be useful at scale, an advantage Open USD has yet to match.

The fight now spans reserve economics among issuers, distribution among payment firms, and settlement volume among chains, but crypto's most reliable users care less about who wins than about who pays them the most to hold the next digital dollar.