Open USD vs. USDC: Will Aave Yields Take a Hit as Corporate Giants Back the New Stablecoin?
Open USD launched with 140+ corporate backers including Visa, Stripe, and Coinbase, raising concerns about potential pressure on USDC yields in DeFi markets like Aave. Here's what the competition could mean for stablecoin depositors.
A new stablecoin called Open USD (OUSD) made its debut this Tuesday, backed by over 140 corporate partners — and it's already sparking serious questions about the future of yield opportunities for USDC holders on Aave.
OUSD allows businesses to mint and redeem tokens at zero cost, while routing reserve income directly to its partners. Though the model is clearly aimed at disrupting Circle's business, the ripple effects could extend deep into decentralized finance (DeFi) markets where USDC currently plays a dominant role.
**How USDC Generates Yield on Aave**
When users supply USDC to Aave, they don't pay anything to Circle. Instead, they earn interest from borrowers who pay to access USDC from the liquidity pool. Aave's interest rate model is tied to utilization — the percentage of supplied USDC that has been borrowed. When utilization exceeds its optimal threshold, supply rates spike quickly to attract more deposits.
This means borrowing demand is the critical variable. According to DefiLlama, USDC suppliers on Aave's main Ethereum market are currently earning around 3.4% APY, though that figure shifts constantly with market demand. In 2024, the same market saw rates hover in the mid-single digits and spike as high as 18% at certain points.
Regulatory context matters here too. The GENIUS Act, signed into law in July 2025, prohibits stablecoin issuers from paying yield directly to holders. This effectively makes lending platforms like Aave the primary venue for stablecoin holders seeking returns. Aave has since expanded into institutional territory by launching a lending market for tokenized assets.
**Why Open USD Could Squeeze Those Returns**
Open USD is coming for the demand side of the equation. Its list of backers reads like a who's who of global finance: Visa, Mastercard, Stripe, Coinbase, and BlackRock — the very networks that process a massive share of the world's commercial payments.
The token's design gives these companies a financial incentive to switch. Partners retain the majority of interest earned on OUSD's reserves. Notably, that reserve income accounted for 99% of Circle's total revenue in 2024, according to its own filing.
Coinbase presents the most telling example. Circle paid Coinbase $908 million in 2024 to distribute USDC, and the exchange already keeps all reserve income generated on balances held with it. Now, Coinbase is backing OUSD — and its deal with Circle is up for renewal in August.
Stripe has gone even further, embedding the token directly into its infrastructure. "Open USD will be the default stablecoin for businesses running on Stripe," said Will Gaybrick, President of Technology and Business at Stripe, during the launch announcement. That's not a minor endorsement — Stripe's Zach Abrams, who now heads Open Standard, co-founded Bridge, the stablecoin company Stripe acquired in early 2025.
If major players begin routing settlement flows through OUSD instead of USDC, borrowing demand for USDC could fall. Lower USDC borrowing on Aave leads to lower utilization, which in turn compresses yields for suppliers.
**Circle's Response and What DeFi Participants Should Monitor**
Circle isn't staying quiet. CEO Jeremy Allaire argues that the company's scale and liquidity advantages, built over years, are not easy to replicate. "Stablecoin networks are platform and network effect businesses that are established over a long period of time, tend towards winner-take-most market structures," Allaire wrote publicly.
The numbers back him up — for now. USDC supply sits near $73 billion, with deep liquidity across major exchanges and regulatory licenses across the US and Europe. It has also maintained its European regulatory standing even as Tether (USDT) faces pressure in the region. USDT remains the market leader at roughly $184 billion in supply.
Circle also has history on its side. Visa, Mastercard, and Stripe all supported Facebook's Libra stablecoin project in 2019 before backing away within months under regulatory pressure.
Still, the immediate market reaction has been harsh. Circle Internet Group (CRCL) shares dropped around 17% on Tuesday and are down approximately 40% over the past month. Compounding the pain, Circle was removed from five major Russell Growth indexes during the annual reconstitution on June 26, triggering additional rules-based selling.
For DeFi users, the practical steps are straightforward. Monitoring Aave's utilization rates and live yield dashboards is a good starting point. Diversifying deposits across multiple protocols and blockchain networks can reduce exposure to any single venue. As OUSD continues its rollout, new onchain yield strategies may also emerge.
The central question for the months ahead is whether Open USD can draw enough demand away from USDC to meaningfully move Aave's yield rates — or whether Circle's head start proves too durable to overcome.
