Author: "Hua" "Hu Yilin" Source: X, @epr510

Introduction

The emergence of Open USD has shifted the competition for stablecoins from the market competition of crypto startups to the infrastructure battle involving traditional finance, payment networks, technology platforms and public chain ecology. Focusing on this new alliance involving more than 140 institutions, scholar Hu Yilin believes that stablecoins are not a moderate of the crypto revolution, but more like a "royalist reform" within the old monetary system: it inherits the efficiency of the blockchain, but retains the central position of the U.S. dollar and the Federal Reserve. The real crypto revolution ultimately returns to a more fundamental question: whether market life must rely on the central bank as the center of the monetary order.

Open USD debuts: stablecoin changes from product competition to alliance infrastructure

On June 30, Open Standard announced the launch of Open USD, a U.S. dollar stablecoin for global capital flows. According to the official introduction, Open USD features three designs: Enterprises can mint and redeem it at zero cost; reserve income is distributed to partners after deducting a small management fee; it is operated by Open Standard, an independent company, and a board of directors composed of partners participates in governance. The participating list spans the payments, banking, tech, and crypto industries and includes Visa, Stripe, Mastercard, American Express, BlackRock, BNY, Standard Chartered, DBS, OCBC, Google, Shopify, Coinbase, Solana, Base, Ripple, MetaMask, Aave, and more.

The Wall Street Journal reported that Open USD plans to be available on Base, Solana and other networks later this year, and about 140 companies have signed up to use it. The report also pointed out that USDT and USDC are still the two largest stable currencies, with a combined market value of approximately US$260 billion. Barron’s noted that after the announcement of Open USD, the stock prices of related companies such as Circle and Coinbase were under pressure because the new alliance directly threatened the stablecoin business model of USDC.

On the surface, this is a competitive upgrade in the stablecoin industry: more companies have joined, more channels have access, and the reserve income distribution mechanism has been redesigned. But in Hu Yilin’s view, the more important significance of Open USD is not how much market share it will steal from USDC or USDT, but that it reveals the historical position of the stablecoin itself: the stablecoin does not really challenge the U.S. dollar standard, it just allows the U.S. dollar standard to run more efficiently.

Stablecoins are not “moderates”, but “royalists”

Hu Yilin supports the development of stablecoins because stablecoins directly touch the legal currency and banking system and can force changes in the real political and economic structure. But he also emphasized that supporting stablecoins as a tool does not mean admitting that stablecoins are the completed form of the crypto revolution.

He had previously compared stablecoins to the Tychonic system in the Copernican Revolution: The Tychonic system absorbed many of the technical advantages of new astronomy and could explain more phenomena, so it was more easily accepted by traditional authorities during the revolution; but it rejected the most core point - not allowing the earth to move. The same goes for stablecoins. It inherits the clearing efficiency, programmability, global liquidity and cross-border payment advantages of the blockchain, but refuses to let the dollar leave its central position.

When it comes to Open USD, Hu Yilin further distinguished between "moderates" and "royalists." He said: “I think someone like Michael Thaler is a ‘moderate’. He also wants to be compatible with the old system, but maintain the core revolutionary point of ‘Bitcoin standard’.” In other words, the Thaler route can accept listed companies, accounting standards, debt financing, capital markets and regulatory frameworks, but it still regards Bitcoin as a new standard asset. It compromised with the old system without abandoning the revolutionary core of "the emperor can be replaced".

Stablecoins are different. Hu Yilin said: "Stablecoins certainly have historical significance, but they are not true revolutionaries." In his view, stablecoins are more like the reformers within the old system. He believes that "the emperor (the U.S. dollar, the Federal Reserve) is good, but the execution system below is somewhat bloated and inefficient. The east factory did not do well in the past and now it is up to us to improve it."

This metaphor sharply points out the inherent limitations of stablecoins: what it opposes is not the dollar center, but the old payment system, bank clearing network, cross-border transfer system and inefficiency of financial intermediaries. It wants to replace lower-level bureaucrats, not the highest authority.

Therefore, when the crypto revolution can only touch "execution systems" such as banks, payment companies, SWIFT, Visa, Alipay, etc., stablecoins and more radical cryptocurrency routes seem to be in the same direction: they both oppose the expensive, slow, and opaque old financial system. But once the issue touches on the US dollar, US debt, the Federal Reserve and the legal currency standard, the differences between the two will appear. Hu Yilin said that stablecoins “prevented the revolution from deepening from the beginning.” This is not to say that stablecoins have no progressive significance, but that their progressive significance has been limited to the old monetary order from the beginning.

When the old system takes over, what will stablecoin entrepreneurs have left?

The particularity of Open USD is that it is not a new currency launched by a separate encryption entrepreneurial team, but an alliance project jointly participated by payment companies, banks, technology platforms, asset management institutions and public chain ecology. Open Standard officially emphasizes that it will allow enterprises to have higher participation in stablecoin reserve income, governance and large-scale use.

This is where Hu Yilin believes that Open USD is symbolic. In the past, a core narrative of U.S. dollar stablecoins was that traditional finance was too slow, too expensive, and too closed, so crypto companies needed to use blockchain to improve efficiency. But now, traditional financial and payment giants are starting to organize stablecoin networks themselves. The old system is no longer just an object to be transformed, but has directly become the initiator and governor of the stablecoin infrastructure.

Hu Yilin believes that this constitutes an irony for native stablecoin companies such as Circle: If the mission of a stablecoin is to serve the US dollar system, be compatible with the banking system, and improve payment efficiency, then when institutions such as Visa, Mastercard, Stripe, BlackRock, BNY, Google, and Coinbase jointly launch their own stablecoin networks, it will be difficult for the original stablecoin entrepreneurs to say that they have irreplaceable revolutionary legitimacy.

He expressed this question as a series of questions: Who is the stable currency going to revolutionize? Is it SWIFT? What if banks also start using stablecoins for settlement? Is it a payment network like Visa or Alipay? What if they themselves also accept, issue or participate in stablecoin networks?

In his view, if the goal of stablecoins is just to get the old system to adopt blockchain payment technology, then when the old system adopts stablecoins, the stablecoin movement can be declared successful, and it should even "retire after success." But if these native stablecoin companies are still unwilling to be included, they must re-explain their fundamental differences from the old system.

"If you are still unwilling, you still have to return to the path of decentralization, give up compromise, and continue the revolution." Hu Yilin said.

"Drawing a clear line" here does not necessarily have only one form. Hu Yilin does not require all projects to follow the Bitcoin route. It can adhere to the currency standard, it can adhere to decentralized governance, it can adhere to censorship resistance, it can also adhere to self-custody, non-freezing, open protocols and exit rights. But the key is that native crypto innovators must retain some truly disobedient part.

“The currency standard is of course the most hard-core. You can also emphasize governance structure and resistance to censorship, but you have to emphasize something deviant.” He said.

This sentence points out the embarrassment of the stablecoin narrative: when a project bases all its selling points on compliance, efficiency, low cost, institutional friendliness, and compatibility with old finance, it is likely that it will not subvert the old system in the end, but be absorbed by the old system into a new department.

Blockchain upgrade package for dollar hegemony

Hu Yilin agrees with a more macro judgment: the more successful the US dollar stable currency is, it does not necessarily mean the more successful the cryptocurrency, but it may mean the more successful the US dollar system is.

If global cross-border e-commerce, immigration remittances, on-chain transactions, RWA, DeFi and corporate settlements all increasingly use US dollar stablecoins, then the local banking system, traditional cross-border payment networks and some capital controls may be weakened, but what will be strengthened will still be US dollar pricing, US debt reserves and the US regulatory framework.

Open USD is the epitome of this trend. It uses blockchain as a new track for capital flows, but the value scale is still US dollars, the underlying income still comes from reserve assets, and the governance structure is jointly participated by corporate alliances and financial institutions. It is not an anti-US dollar financial revolution, but more like a blockchain upgrade package for US dollar hegemony.

This also explains why Hu Yilin believes that stablecoins are becoming the long-term enemy of most native cryptocurrencies. The problem is not just that stablecoins take away the function of a medium of exchange, but that it may reshape the basic structure of the on-chain world.

If the pricing unit of on-chain finance is US dollar stable currency, the mortgage assets are U.S. bonds and RWA, the source of income is traditional financial assets, and the user's value anchor is also US dollars, then the more prosperous on-chain activities do not necessarily mean that ETH, SOL or other underlying chain currencies have a currency premium. The on-chain world can prosper, but wealth is precipitated in off-chain U.S. dollar assets, stablecoin issuers and traditional financial income structures. In Hu Yilin's previous words, stablecoins break the logic of "the more prosperous the chain is, the more the local currency will appreciate" and become "the more prosperous the chain is, the richer the chain is."

“Selling fuel” is okay, but don’t reduce the civilization-level narrative to a fee narrative

The stablecoin issue also caused Hu Yilin to criticize Ethereum’s “oil” narrative again. Many Ethereum supporters believe that even if the chain mainly uses USDT, USDC or Open USD, transactions will still consume ETH, DeFi activities will still bring handling fees, and L2 will still be settled to the main network, so ETH will still benefit from the on-chain prosperity.

Hu Yilin’s rebuttal is: Handling fees are of course valuable, but handling fees are not currency-based.

He continues the gas metaphor commonly used by the Ethereum community, but pushes it in the opposite direction. "The price of gasoline will not be unlimited, because when gasoline is expensive to a certain extent, people will have stronger incentives to find alternative energy sources." He said. Not to mention, it’s much easier to replace Ethereum than gas infrastructure. Changing cars from fuel to electric requires a new industrial chain and product design; but for a DeFi protocol to migrate from Ethereum to a compatible public chain, the technical threshold is much lower.

In his view, if Ethereum only relies on fee income, it will encounter the upper limit of the valuation of infrastructure service providers. Exchanges, clearinghouses, and payment networks can be important, but their revenue scale is not equal to the currency premium of the underlying assets. Hu Yilin asked: How much does the Nasdaq exchange earn from handling fees in a year? Add up the net income of global stock exchanges. Is there any Apple company with high income?

However, he does not believe that all public chains must bear the same revolutionary mission. The ambitions of public chains such as Solana are not that big. Their positioning is closer to "being a strong competitor at the company level", such as becoming a high-performance alternative to Ethereum. Hu Yilin said that if a project's "original positioning is to sell fuel, then of course it can accept this positioning." For this type of chain, handling fees, performance, ecology, developer experience and application migration capabilities are the core indicators on which they can compete.

The problem is that not all crypto assets can be satisfied with "selling fuel." Hu Yilin distinguished three types of projects: the first is Bitcoin, which has been aimed at the currency revolution since its birth; the second is Ethereum, which wants to be a "world computer" and an innovation at the level of human civilization; the third is many emerging small currencies, which are not backed by traditional capital and must rely on grand narratives to attract attention and trust.

Therefore, the real disagreement is not whether all coins should talk about revolution, but rather: any project that wants to pursue a higher ceiling cannot avoid the revolutionary narrative. You can only be a block space service provider, you can only be a high-performance chain, you can only be a financial application platform, but if you claim that you want to change the world, reorganize the infrastructure of civilization, and become the next generation currency or the next generation Internet, then you cannot reduce your local currency narrative to fee fuel.

The Copernican moment of the crypto revolution: the earth can move

In the history of astronomy, the key to the Copernican revolution was not just a simpler calculation model, but also people's acceptance of a counterintuitive fact: the earth can move, but people's daily lives will not collapse as a result.

Hu Yilin believes that the monetary revolution of blockchain and Bitcoin also have similar ideological thresholds. The real Copernican moment is not when stablecoins make cross-border transfers cheaper, nor when banks learn to use on-chain settlement, but when market participants begin to realize that economic life does not necessarily require a fixed central bank as the center of monetary order.

"The key is for people to emancipate their minds: the earth can move, and my down-to-earth life does not depend on the earth being stationary." Hu Yilin said. Corresponding to the currency issue, the core concept is: "Our lives and normal market transactions do not depend on a fixed central bank. There is no need for the central bank to take action from time to time to maintain market stability. What is currency and the value of the currency are all determined by the market spontaneously. It is determined by each dispersed specific transaction. There is no need for a specific institution to promulgate this matter."

This is also the fundamental reason why he insists on the Bitcoin standard and criticizes the stablecoin standard. Stablecoins can increase efficiency, can be a transitional tool, and can serve as a bridge between the real world and the world on the chain. But if the world on the chain is still denominated in U.S. dollars in the end, with U.S. debt as the underlying asset, and central bank currency as the ultimate value measure, then the so-called "blockchain revolution" is just a plug-in to the U.S. dollar system.

The appearance of Open USD just makes this debate clearer. It may be an important step in the commercialization, institutionalization and scale of stablecoins; but from the perspective of the original ideals of cryptocurrency, it may also mark a successful incorporation of blockchain technology into the old system.

Hu Yilin does not deny the historical significance of stablecoins. But historical significance does not mean that the revolution is completed. The Tycho system was once popular precisely because it was compatible with new technologies and old authorities; but what really changed the world picture was still the new paradigm that made the earth move.

For the crypto world, the problem is the same: if the dollar never moves and the Federal Reserve is always at the center, then stablecoins, no matter how open and efficient they are, are just precision instruments of the old universe. The real revolution will have to wait until the market believes that the monetary order can no longer revolve around that center.