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Circle Unveils New Method for Moving USDC Between Blockchains
The cross-chain transfer protocol seeks to improve liquidity of the major crypto payments rail.
By Danny Nelson
Updated Apr 26, 2023, 6:02 p.m. Published Apr 26, 2023, 4:39 p.m.
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Austin, Texas — USDC issuer Circle Internet Financial on Wednesday released a new method to move the major stablecoin between blockchains that it says is faster, safer and cheaper than the “bridges” that are widely used in decentralized finance.
Called the “Cross-Chain Transfer Protocol,” or CCTP, the technology will be used initially for USDC transfers between the Ethereum and Avalanche blockchains, with more chains coming in the second half of 2023. DeFi apps can integrate relevant smart contracts to make it easy for users to move their stablecoins.
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The technology attempts to break down the barriers now fragmenting USDC’s $30 billion market cap across many different blockchains. Though Circle issues “native” USDC on many top networks, including Ethereum and Avalanche, those asset tranches were more or less partitioned; those who wanted to "bridge" the divide had to engage in complicated and sometimes expensive cross-chain transfers.
Read full coverage of Consensus 2023 here.
Circle’s new method seeks to replace bridges, which solved that problem by creating another asset, a derivative token called a wrapped asset. CCTP works by destroying USDC on the source chain and recreating it on the destination chain.
The process could pay the biggest dividends when it comes to asset swaps. It could be used to move cross-chain and cross-token transfers behind the scenes.
“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,” Joao Reginatto, vice president of product, said in a press release.
Wallet company MetaMask, bridge operator Wormhole and bridge aggregator LI.FI are among the infrastructure providers with CCTP coverage at launch.
Circle couldn't immediately be reached for comment.
Read more: USDC Stablecoin Strengthened by U.S. Banking Crisis in March, Circle CEO Says
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