- Crypto payment company Circle plans to introduce its US Dollar-pegged stablecoin, USDC, natively on Ethereum’s scaling network, Arbitrum, on June 8th.
- This move would transition Arbitrum from using a bridged version of USDC to a native version, introducing institutional on- and off-ramps and enabling the Cross-Chain Transfer Protocol (CCTP) for the stablecoin.
Circle, a significant player in the crypto payment industry, is set to launch its US Dollar-backed stablecoin (USDC) natively on Arbitrum, Ethereum’s popular scaling solution. Both Circle and Arbitrum revealed this noteworthy step on Twitter, scheduling the launch for June 8th.
Arbitrum, responsible for more than 65% of the total value locked in networks promising accelerated transactions and lower fees, employs Optimistic Rollup. This method aggregates transactions on a sidechain and updates Ethereum with a single condensed transaction, optimizing speed and cost-efficiency.
Operating as Layer 2 (L2) networks, systems like Arbitrum sit atop Layer 1 (L1) blockchains like Ethereum, benefiting from their security model. L2 solutions generally attract users seeking cheaper fees and swifter transactions. However, this necessitates moving funds from L1 to L2, a process known as “bridging.”
Currently, Arbitrum utilizes a bridged variant of USDC from Ethereum, soon to be renamed “USDC.e.” This token can be envisaged as a voucher that users can exchange back on Ethereum for the original USDC. Despite no immediate modifications to the Arbitrum Bridge, the team anticipates the bridged version will be replaced by the native stablecoin in the upcoming week.
The transition to native USDC offers several advantages, as highlighted by the Arbitrum Foundation. These perks include institutional on- and off-ramps through Circle and their partners. It also enables USDC to operate on the Cross-Chain Transfer Protocol (CCTP), which replaces the “lock-and-mint” bridge.
Instead, USDC will be burnt on the source chain and then minted for the same amount on the destination chain, in this instance, Arbitrum.
Circle and USDC have attracted media attention recently for their link to the collapse of the Silicon Valley Bank, where the stablecoin lost its peg, and Circle disclosed a $3.3 billion exposure to the faltering institution.
USDC has seen a significant reduction in its market share over the past year, with its market capitalization plummeting from $54 billion to the current $28 billion. As stablecoins like USDC are pegged to the US Dollar and intended to maintain their price, their market cap correlates closely with their circulating supply, hinting at a significant decline in interest in USDC.
Meanwhile, Arbitrum ranks #38 on Coingecko, with its native token ARB trading at $1.16, marking a minor 0.6% increase on the day.