Circle Launches Cross-Chain Transfer Protocol for USDC
Luisa Crawford Apr 27, 2023 09:46
Circle has released a mainnet protocol allowing users to transfer USDC between Ethereum and Avalanche. The Cross-Chain Transfer Protocol (CCTP) eliminates the need for USDC bridges and aims to reduce fragmentation in the Web3 ecosystem.
Users are now able to move US Dollar Coin (USDC) between Ethereum and Avalanche thanks to the implementation of a new mainnet protocol by Circle, the company that created the US Dollar Coin (USDC). The Cross-Chain Transfer Protocol (CCTP), which was introduced on April 26, intends to lessen the amount of fragmentation that exists within the Web3 ecosystem and do away with the need for USDC bridges.
Prior to this update, customers who owned USDC on Ethereum and wished to move it to Avalanche were required to either deposit their coins with a Circle partner or utilize a third-party bridge to complete the transfer. Nevertheless, customers are now able to transfer their USDC straight across the two networks thanks to the newly developed CCTP.
The new protocol operates in a manner that is distinct from that of a conventional bridge. Instead of putting a lock on tokens that are submitted to its contract, it will entirely destroy them and then issue fresh tokens on the network that is receiving them. Users have the ability to immediately convert these newly issued tokens into bank deposits by depositing them with Circle or one of its partners.
The Circle team anticipates that the CCTP will remedy the problem of fragmentation that exists within the Web3 ecosystem. At the moment, there are a number of unauthorised versions of USDC that are circulating on other networks. The majority of these versions are the consequence of tokens on one network being bridged to another network. The development team anticipates that the usage of unauthorised copies will gradually decrease now that there is an official means to move coins across networks. This will result in the token being easier to understand and utilize.
A significant number of the most prominent cross-chain protocols, such as Celer, Hyperlane, LayerZero, LI.FI, MetaMask, and Wormhole, as well as others, have already committed to making use of CCTP in the future. It is anticipated that the new protocol will get widespread adoption as a result of this support, which will further reduce the need for USDC bridges and facilitate the use of the token across other networks.
In the realm of decentralized finance (DeFi), the introduction of Circle's new Cross-Chain Transfer Protocol represents an important step forward overall. This demonstrates both the rising desire for smooth interoperability across multiple blockchain networks as well as the willingness of prominent companies in the industry to cooperate in order to enhance the user experience for everyone. The future of DeFi is expected to become more linked and available to a larger audience as the number of projects that embrace cross-chain protocols like CCTP increases.
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