Circle Introduces 'Bridged USDC Standard' to Simplify Launching USDC on Various Networks
Summary:
Circle has introduced a new "bridged USDC standard" to simplify the process of launching its stablecoin, USDC, on different networks. The two-phase protocol gives third-party developers temporary control of token contracts, with tokens initially backed by native versions on another network. Eventually, Circle assumes control, backing the token with its reserves. This process negates the need for "migrations" where users swap unofficial USDC tokens for official ones, as unofficial tokens can automatically upgrade to official status.
Circle has introduced a new method to simplify the launch of its stablecoin, USDC, across various networks, as stated in their blog post on Nov. 21. This novel protocol, known as the "bridged USDC standard," offers developers a two-stage approach to launch the token. During the initial stage, the non-Circle developer is in charge of token contracts, with the newly minted token on the new network being supported by a version on a different network. In the next stage, Circle assumes control of the contracts, and the token is directly backed by the company's reserves, although this step may not happen in all cases.
The blog post explains that the token generated in stage one will act as a placeholder or unofficial version of the USDC, and as such is not issued nor redeemable by Circle. Nevertheless, this provisional token can serve as an extendable version of USDC in any environment that supports bridging.
If Circle and the third-party developer subsequently choose to officialize this token, they have the option to transition to native issuance seamlessly. Circle's initiative is aimed at eliminating the so-called "migrations," where users have to exchange their unofficial USDC tokens for the official ones. With the new protocol in place, such migrations could be rendered obsolete since the unofficial tokens already in user wallets would be upgraded to official status automatically.
As per the associated Github guidance, developers must use a bridge with the capability to upgrade certain features and avoid making changes to the bridge after token issuance. When Circle and the developer conclude to upgrade the token to an official status, the developer can curb new mints on the bridge and align bridging activities to ensure the USDC total supply is in sync. At this juncture, the contract's ownership would be transferred to Circle, and the native coins supporting the tokens on the new network would be incinerated - meaning the new network's tokens would be directly backed by Circle's reserves.
In previous months, Circle has rolled out native versions of USDC on the Base network in September and on Polygon in October.
Published At
11/21/2023 4:02:22 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.