- Circle’s Cross-Chain Transfer Protocol (CCTP) extends to Arbitrum, the third blockchain to benefit from the protocol following Ethereum and Avalanche.
- Despite the CCTP’s launch, Arbitrum’s native token, ARB, experiences a 6% drop, diverging from the typical market reaction.
Circle, the digital currency company behind the second most prominent stablecoin, USD Coin (USDC), has now incorporated its innovative Cross-Chain Transfer Protocol (CCTP) into Arbitrum (ARB). This strategic move came a few weeks following the debut of the native USDC version on the Arbitrum’s layer-2 (L2) scaling solution.
The CCTP, as designed by Circle, serves to mitigate the necessity for third-party bridges when transferring USDC across networks. This transformative protocol was first introduced on Ethereum (ETH) and Avalanche (AVAX) in April and has now been extended to Arbitrum, solidifying its position as the third blockchain to reap its benefits.
The central function of CCTP is to enable permission-less fund transfers between blockchains through a system of native burning and minting. Contrasting with traditional bridges that secure tokens sent to their contract, the CCTP protocol obliterates them from the sending network while generating new tokens on the receiving end. By doing so, the protocol bypasses the need for liquidity lock-up, rendering a safer, quicker method for USDC transfer across its supported chains.
Addressing liquidity fragmentation and interoperability issues in the burgeoning Web3 space, Circle intends for this innovative feature to become the official method for transferring USDC, leading to a reduction in unofficial versions. The integration of this protocol means users need not switch wallets based on the network, and developers on Arbitrum can create apps that facilitate native cross-chain deposits, exchanges, and purchases, thereby nurturing the growth of decentralized finance (DeFi).
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Yet, in an unexpected turn of events, the announcement of CCTP’s launch didn’t have the anticipated positive effect on Arbitrum’s native token, ARB. In contrast, ARB witnessed a sharp decline of 6%, according to CoinMarketCap data. Meanwhile, the trade volume of USDC on Arbitrum remained stable, with no noticeable increase, maintaining the previous day’s figure of $3.82 billion as recorded by Santiment.
With this development, Circle’s ambition of establishing an interconnected world of USDC, ensuring its effortless mobility across different ecosystems to boost liquidity, comes one step closer to fruition. Offering simplicity and other associated benefits, the CCTP protocol marks a milestone in driving USDC interoperability across the blockchain landscape.
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