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Stablecoin issuer Circle has launched its Cross-Chain Transfer Protocol (CCTP) on the mainnet, enabling permissionless transfers of USDC natively across supported blockchains.
With the new transfer protocol, developers can now build applications that support different native versions of USDC. It is now available across seven primary networks in addition to Ethereum: Solana, Avalanche, TRON, Algorand, Stellar, Flow, and Hedera. Crypto infrastructure providers such as Celer, Hyperlane, LayerZero, LI.FI, MetaMask, Multichain, Rarimo, Router, Socket, Wanchain, and Wormhole have already integrated CCTP.
This move from Circle aims to establish an open dollar developer platform for internet-based money transfers. The newly launched CCTP allows USDC to be "teleported" across chains, effectively being destroyed on the source chain and recreated 1:1 on the destination chain, with its U.S. dollar reserves remaining intact.
Recently, Circle CEO Jeremy Allaire has voiced concerns over the growing trend of "de-dollarization" as more countries, particularly in Asia and Latin America, move away from the use of the U.S. Dollar as base currency for international trade and finance. At a recent crypto conference, Allaire called for the U.S. government to expedite stablecoin regulation and issue a digital dollar CBDC, warning that failure to do so would be a "giant missed opportunity" for the country.
The technology behind CCTP hence attempts to overcome the fragmentation of USDC's $31 billion market cap across various blockchains. Although Circle issues "native" USDC on several top networks, including Ethereum and Avalanche, these asset tranches were essentially partitioned. Users wanting to bridge the gap had to engage in complex and sometimes costly cross-chain transfers. CCTP seeks to replace bridges, which created derivative tokens called wrapped assets, through the aforementioned mechanism of destroying USDC on the source chain and near-instantly recreating it on the destination chain.
Circle Product Vice President Joao Reginatto claims that CCTP is a permissionless protocol designed for developers to take advantage of this transport primitive. DeFi apps can integrate relevant smart contracts to streamline stablecoin transfers for users.
"With CCTP, developers can simplify the user experience and their users can trust that they are always transacting with a highly liquid, safe, and fungible asset in native USDC. This milestone makes USDC a natively multi-chain digital dollar," Reginatto shares.
While USDC is the second-largest stablecoin behind Tether (USDT), its circulation has been shrinking over time, with a current supply at $31 billion, according to blockchain data from CoinMarketCap. This represents a decline of 30% since the beginning of the year and 45% since its all-time high, resulting in a decrease in USDC's market share to 23.5%. In contrast, Tether holds a 62% share of the stablecoin market.
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