Circle Promotes USDC With The Mainnet Launch Of Cross-Chain Transfer Protocol
- Circle announced the mainnet launch of the Cross-Chain Transfer Protocol (CCTP) for Ethereum and Avalanche developers.
- USDC may now flow natively across supported chains thanks to the permissionless protocol.
- CCTP is already in use on mainnet by some of the major multi-chain applications, wallets, bridges, and messaging protocols.
According to an April 26 announcement, Circle, the issuer of USD Coin, has launched a mainnet protocol that allows users to transfer USDC between Ethereum and Avalanche.
Avalanche users who had USDC on Ethereum previously had to deposit their coins with a Circle partner or use a third-party bridge to transfer their USDC from one network to the other. This requirement for USDC bridges appears to be eliminated by the new Cross-Chain Transfer Protocol (CCTP).
Apps that include CCTP can allow users to “burn and mint” USDC natively, resulting in USDC “teleporting” from one blockchain to another. CCTP provides a highly secure and capital-efficient way to transact with USDC in an increasingly multi-chain environment by avoiding the complications and risks of traditional “lock and mint” approaches.
On April 13, the team released a video demonstrating how the new protocol works. It does not lock tokens sent to its contract, unlike a traditional bridge.
Instead, it destroys them completely and creates new tokens on the receiving network. Users can directly redeem these new tokens for bank deposits by depositing them with Circle or its partners.
Over time, CCTP will aid in the unification of liquidity around native USDC in Web3 and the resolution of fragmentation issues caused by multiple unofficial bridged versions of USDC floating around the ecosystem.
Furthermore, its ability to connect blockchains can support simpler and safer payment experiences, allowing customers to send and receive Circle’s stablecoin without knowing which blockchain their USDC is on.
CCTP is an important step toward pushing infrastructure and complexity to the background, paving the way for developers to build consumer-scale Web3 apps.
Developers building on top of CCTP can combine key capabilities such as trading, lending, payments, gaming, and more to simplify user interfaces and deliver new mainstream use cases to their users.
According to Joao Reginatto, VP of Product:
“CCTP helps to solve today’s DeFi liquidity and capital inefficiency issues due to the risks and fragmented nature of bridged assets. With CCTP, developers can simplify the user experience and their users can trust that they are always transacting with a highly liquid, safe and fungible asset in native USDC. This milestone makes USDC a natively multi-chain digital dollar.”
Users can use CCTP-powered apps to perform various cross-chain transactions with USDC, such as digital asset swaps (e.g., ETH on Ethereum for AVAX on Avalanche), make deposits on a decentralized exchange with USDC sourced from another chain, or purchase NFTs across chains seamlessly.
Many of the largest cross-chain protocols, including Celer, Hyperlane, LayerZero, LI.FI, MetaMask, Wormhole, and others have already pledged to use CCTP in the future, according to the team.
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