Thursday, September 21, 2023

Circle launches cross-chain USDC transfer protocol for Ethereum, Avalanche

Circle, the creator of US Dollar Coin (USDC), has launched a mainnet protocol that lets customers transfer USDC between Ethereum and Avalanche, in response to an April 26 announcement. Previously, Avalanche customers who held USDC on Ethereum needed to deposit their cash with a Circle accomplice or use a third-party bridge to transfer their USDC from one community to the opposite. The new Cross-Chain Transfer Protocol (CCTP) protocol seems to cast off this want for USDC bridges.

The group launched a video on April 13 showing how the brand new protocol works. Unlike a standard bridge, it doesn’t lock tokens despatched to its contract. Instead, it utterly destroys them and points new tokens on the receiving community. Users can redeem these new tokens for financial institution deposits instantly, by depositing the tokens with Circle or its companions.

In the announcement, the group mentioned that it expects CCTP to resolve the issue of “fragmentation” within the Web3 ecosystem. Currently, there are a number of unofficial variations of USDC floating round on numerous networks, most of that are the results of tokens on one community being bridged to a different. Now that there’s an official option to transfer cash from one community to a different, the group expects these unofficial copies to slowly decline in use, making the token much less complicated to make use of.

The group mentioned that lots of the largest cross-chain protocols have already pledged to make use of CCTP going ahead, together with Celer, Hyperlane, LayerZero, LI.FI, MetaMask, Wormhole and others.

Related: VISA will facilitate USDC payments, thanks to fresh partnership

Joao Reginatto, Circle’s vice chairman of product, mentioned he believes the brand new protocol will assist enhance liquidity and capital effectivity in decentralized finance:

“With CCTP, builders can simplify the person expertise and their customers can belief that they’re all the time transacting with a extremely liquid, secure and fungible asset in native USDC.”

USDC is a fiat-backed stablecoin issued by Circle. The firm claims that every USDC token is backed dollar-for-dollar in its reserves. Users can mint USDC by opening an account and depositing money with both Circle itself or one in every of its companions, corresponding to Coinbase. Once they’ve accomplished this, they’ll obtain the coin on a number of networks, together with Ethereum, Avalanche, Stellar and Polkadot.

Users have misplaced billions of {dollars} price of USDC and different cryptocurrencies attributable to bridge hacks over the previous few years, as attackers have repeatedly discovered learn how to take away locked cash from bridge contracts and go away their copies on the receiving community with no backing. This has left builders wondering how to secure bridges for future use as digital belongings turn out to be extra mainstream.