Circle Introduces Protocol to Transfer USDC Stablecoin Between Ethereum and Avalanche Networks
Circle, the company behind the US Dollar Coin (USDC), which is currently valued at $1.00, has launched a mainnet protocol enabling the transfer of USDC between Ethereum and Avalanche.
Previously, users who owned USDC on Ethereum while using Avalanche had to either deposit their coins with a Circle partner or use a third-party bridge to transfer their USDC from one network to the other. However, the new Cross-Chain Transfer Protocol (CCTP) eliminates the need for USDC bridges.
In a video released on April 13th, the team demonstrated how the new protocol works, which destroys the tokens sent to its contract and issues new tokens on the receiving network.
These new tokens can be redeemed for bank deposits directly by depositing the tokens with Circle or its partners.
The team believes that CCTP will help to solve the problem of “fragmentation” in the Web3 ecosystem, which is caused by the multiple unofficial versions of USDC floating around on various networks.
They expect these unofficial copies to decline in use as CCTP becomes the official way to transfer coins from one network to another.
The team also stated that many of the most significant cross-chain protocols, such as Celer, Hyperlane, LayerZero, LI.FI, MetaMask, Wormhole, and others, have already committed to using CCTP in the future.
Joao Reginatto, the vice president of product at Circle, stated that he believes the new protocol will enhance the liquidity and capital efficiency in decentralized finance.
The Cross-Chain Transfer Protocol (CCTP) will enable developers to simplify the user experience, and users can trust that they are transacting with a highly liquid, safe, and fungible asset in native USDC.
It is worth noting that USDC is a stablecoin backed by fiat currency and issued by Circle. The company claims that each USDC token is backed one-to-one by US dollars held in reserve.
Users can mint USDC by creating an account and depositing cash with Circle or one of its partners, such as Coinbase.
Once they receive the coin, they can use it on various networks, including Ethereum, Avalanche, Stellar, and Polkadot. Nevertheless, hackers have managed to remove locked coins from bridge contracts, leaving their copies on the receiving network without any backing, leading to billions of dollars worth of losses in USDC and other cryptocurrencies.
Developers are now exploring ways to secure bridges for future use as digital assets gain more mainstream acceptance.
