Launch of Bridged USDC Contract by Circle
Circle, the entity behind USDC, has deployed a bridged token contract for the stablecoin, targeting emerging and future networks. Announced on Nov. 21, this new standard facilitates the migration of USDC onto Ethereum Virtual Machine (EVM)-compatible chains.
Functionality of the Bridged Standard
The bridged USDC standard allows third parties to lock USDC on Ethereum or another network and then bridge corresponding tokens onto their network. This standard aims to boost stablecoin liquidity and explore new use cases in various blockchain ecosystems.
Distinction from Native USDC
Unlike native USDC, tokens using this bridged standard are not redeemable for USD and are incompatible with Circle’s Cross-Chain Transfer Protocol. This makes bridged USDC a proxy to the native token, suitable for ecosystems where bridging is feasible.
Adoption by Layer 2 Networks
Several Layer 2 networks, including Linea, Scroll, and Kroma, have already implemented the bridged USDC standard, suggesting its potential impact on the DeFi landscape.
Besides USDC, users can also utilize this standard to migrate Circle’s EURC stablecoin across EVM chains, expanding its usability in the DeFi space.
Circle’s Expansion and the Challenge of New Networks
Circle has been expanding the reach of its stablecoins, with USDC now natively issued across 15 different networks. However, the rapid development of new blockchain technologies poses a challenge to the pace of native USDC deployments.
The Solution: Bridged USDC Standard
To address this challenge, Circle introduced the Bridged USDC Standard, which allows for a more agile and adaptable approach to stablecoin deployment across various blockchain networks. This standard is also intended to be extended to Circle’s euro-backed stablecoin, EURC.
Benefits for Blockchain Ecosystems
The bridged USDC standard offers benefits to blockchain networks, developers, and users by providing early access to stablecoin liquidity and the potential for a seamless upgrade to native USDC in the future. It aims to solve the cold start problem for new networks and avoid liquidity fragmentation and lengthy migrations.
Future Directions and Collaborations
Circle is exploring the extension of this standard to non-EVM blockchains and considering a broader framework for bridged ERC-20 token contracts. The goal is to address liquidity fragmentation and foster collaboration in the asset issuance industry.
