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- Circle introduces Bridged USDC Standard to make USDC deployment on new blockchains faster and easier, solving the “cold start” problem.
- Bridged USDC allows quick access to stablecoin liquidity, while native USDC is fully backed and redeemable 1:1 for US dollars.
In a move aimed at streamlining the deployment of USD Coin (USDC) on Ethereum-virtual machine (EVM) blockchains, Circle has introduced a groundbreaking solution – the Bridged USDC Standard. This innovative standard will revolutionize the blockchain world by offering a seamless path to access USDC on emerging blockchain networks.
Circle, a prominent player in the cryptocurrency space, has unveiled a new and simplified method for EVM blockchains to deploy a bridged version of USDC on-chain. This development is a significant step towards making USDC more accessible to a wide range of blockchain networks, particularly those in their nascent stages.
Bridging the “Cold Start” Gap
A key challenge new blockchain networks face is the “cold start” problem – the difficulty of generating activity and liquidity on a fresh network. Native USDC, while highly desirable, often takes time to deploy, resulting in delays in network utilization.
The Bridged USDC Standard provides an elegant solution to this problem. Unlike native USDC, bridged USDC can be rapidly spun up by new Layer 1 (L1) and Layer 2 (L2) rollup teams and third-party bridge deployers. This agility in deploying bridged USDC plays a pivotal role in kickstarting stablecoin liquidity on emerging blockchain networks, effectively addressing the “cold start” challenge.
Circle’s vision extends beyond the confines of the American market. Recent reports indicate that most USDC adoption occurs outside the United States. Circle CEO Jeremy Allaire has emphasized the company’s commitment to the global market, with an estimated 70% of USDC stablecoin adoption being non-US based. This global perspective underscores the importance of making USDC accessible to blockchain networks worldwide.
Native vs. Bridged USDC
To comprehend the significance of the Bridged USDC Standard, it’s essential to differentiate between native and bridged USDC. Native USDC, issued by Circle, is fully backed by US dollars and is always redeemable on a 1:1 basis. It serves as the official form of USDC on a given blockchain and is interoperable with multiple blockchain networks via Circle products like Circle Mint and Cross-Chain Transfer Protocol (CCTP).
On the other hand, bridged USDC, while unofficial and not issued or redeemable by Circle, fills a critical role in rapidly jumpstarting activity on new blockchain networks. Bridged USDC can be deployed swiftly by new L1 and L2 rollup teams and third-party bridge deployers, making it a versatile tool for bootstrapping stablecoin liquidity on emerging networks.
Native USDC Deployment Challenges
The rapid evolution of the blockchain ecosystem has presented challenges for the timely deployment of native USDC on new blockchain networks. Circle acknowledges that the pace of ecosystem innovation often outpaces the speed at which new USDC deployments can occur.
As a result, Circle has occasionally introduced native USDC on new blockchains only after third parties have bridged a substantial amount of USDC liquidity. While migrating from bridged USDC to native USDC is possible for developers and users, the ideal scenario is to avoid migration entirely. This challenge has prompted Circle to seek innovative solutions to bridge the gap effectively.
Key features of the Bridged USDC Standard include:
Permissionless and equitable: Anyone can incorporate the standard to deploy a bridged USDC token contract, including new L1 and L2 rollup teams and chain-sponsored third-party bridge deployers.
Standardized and extensible: Securely transitioning ownership of a bridged USDC token contract to Circle follows a predefined procedure. This procedure can also extend to bridged EURC, providing flexibility and scalability.
Secure and audited: The standard builds on open-source ERC-20 contract code, relying on the same audited USDC smart contract that has protected billions of dollars in liquidity.
