Circle – the issuer of the second largest stablecoin by market cap, USDC – is preparing to launch a permissionless protocol for letting users transfer their stablecoins between blockchains.
The company said the protocol can be embedded into dapps, and provide the most “capital efficient” path for cross-chain USDC transfers.
In a tweet on Monday, Circle CEO Jeremy Allaire said the Cross-Chain Transfer Protocol (CCTP) will “help foster more scalable, efficient, secure and user friendly apps built on USDC.”
USDC, a stablecoin, is value pegged to the U.S. dollar. Each token holds its “stable” price by maintaining 1:1 convertibility for $1.00 at all times through Circle’s reserves, which are comprised of over $43 billion in cash and U.S. Treasuries.
Stablecoins are a core element of the Defi economy, which would otherwise be difficult to interact with given the volatility of other cryptocurrencies. With a cross-chain bridge for the second-largest of the bunch, Circle’s new tool is aimed toward “unifying liquidity across the ecosystem and simplifying user experience,” per its website.
CCTP intends to feature more functionality than the typical blockchain bridge, however, due to being exposed to smart contracts. For instance, developers may build flows that let users can move USDC across chains and directly into a given defi protocol to begin generating yield, in what feels like one seamless transaction.
To use the protocol, users begin by burning their USDC tokens on their source chain. This burn is later observed and attested to by Circle, which then mints a new batch of USDC on the destination chain, and sends it to the user’s provided address.
“Developers can leverage CCTP to build novel cross-chain apps that stack together the various functionalities of trading, lending, payments, NFTs, gaming and more – all while abstracting complexity away from users,” explained the company.
Circle’s Expanding Network
In November, Circle integrated with Apple Pay for its existing merchants, letting its customers check out from apps like Safari without the burden of filling out lengthy forms. Businesses need only a Circle account and Apple developer account to use the service.
The company also partnered with TBD, a subsidiary of Jack Dorsey’s Block, in September, with the mission of creating global fiat-to-crypto bridges. Block intends to use these bridges as part of its mission to form a decentralized Bitcoin exchange – an asset that is mostly confined to trade with help from CeFi institutions.