Circle, the globally recognized financial technology firm, recently made a significant announcement regarding its stablecoin, USD Coin (USDC). They revealed plans to launch a native version of USDC on the Arbitrum network, scheduled for June 8, 2023.
This major development has a big impact. It replaces the current Ethereum-bridged USDC version with a native one. This enhances the functionality of the Arbitrum ecosystem significantly.
The primary advantage of the native USDC is its compatibility with the upcoming Cross-Chain Transfer Protocol (CCTP). The protocol aims to eliminate the usual delays associated with bridge withdrawals.
Moreover, the new USDC version will be fully backed, redeemable for US dollars on a 1:1 basis, and will also pave the way for future enhancements due to its upgradable smart contract.
In this transition, we will rebrand the Ethereum-bridged version of USDC as “USDC.e” in user interfaces, documentation, and block explorers. The new native USDC, however, will retain a separate token address, ensuring the smooth continuation of existing operations.
Arbitrum, which provides 7x more throughput than Ethereum at a lower cost, will collaborate with Circle to facilitate a seamless transition of liquidity from the bridged USDC to the native version over time.
The Arbitrum Bridge will continue to support the bridging of USDC to and from Ethereum without any immediate changes. This transition aims to enable transfers in minutes, thus eliminating delays.
The Impact Of Native USDC On The Stablecoin Market
Despite the overall negative trend in the stablecoin market over the past year, Circle remains focused on its mission. USDC, a leading dollar-based stablecoin, boasts an approximately $28.8 billion market cap.
Experts predict that it will be the first fully regulated stablecoin issuer, offering fast transaction speeds and lower costs than traditional payment systems to a wide audience.
Over the past year, USDC’s market capitalization has taken a significant hit, dropping from $55 billion to $29 billion. Meanwhile, Tether, one of its top competitors, has experienced an upswing in its USDT stablecoin.
From having a 47.04% market share in 2022 to now owning nearly 66%, its market capitalization has risen to over $83 billion. This move by Circle represents a calculated step to reverse the trend and regain its market share.
The company aims to improve its service offering and transaction speeds by leveraging the benefits of blockchain technology. This move is expected to boost adoption rates for its native USDC.
Circle’s forthcoming launch of the native USDC on Arbitrum signifies an important step forward in evolving blockchain-based financial solutions.
The integration of CCTP into Arbitrum post-launch will further speed up the movement of USD Coin across Ethereum and other supported chains, marking a significant advancement in cross-chain operations.