Circle has launched its new bridging system, the Cross-Chain Transfer Protocol (CCTP), to allow users to easily transfer their USDC between different blockchains. CCTP uses a “burn and mint” process to avoid locking up liquidity in traditional bridges, and is currently available on Ethereum (ETH) and Avalanche (AVAX).
Circle launches CCTP on Avalanche and Ethereum
Circle, the USDC issuing companythe second most capitalized stablecoin on the market behind Tether’s USDT, revealed its Cross-Chain Transfer Protocol (CCTP)a new bridge system that will allow users to transfer their USDC from one blockchain to another by making liquidity smoother.
Instead of the classic bridge system, where it is necessary to tie up cash in a smart contract to recover their equivalent on another blockchain, the CCTP works in a more natural way. Indeed, when a user uses the CCTP, its USDC will be burned on blockchain 1 and will be mint on blockchain 2. Thus, no liquidity will be locked in the bridge, and USDC movements will be much more transparent.
2/ #CCTP removes the need to bridge $USDC via traditional lock-and-mint approaches, improves liquidity across the blockchain ecosystem, and enables developers to provide their users a seamless and secure experience moving USDC natively across chains. https://t.co/XUAUEjL8AK
— Circle (@circle) April 26, 2023
“CCTP removes the need to link USDC through traditional lock and mint approaches, improves liquidity in the blockchain ecosystem, and enables developers to provide their users with a seamless and secure experience by moving USDC natively between the chains. »
For now, the Cross-Chain Transfer Protocol is available on the Ethereum (ETH) and Avalanche (AVAX) networks.
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USDC loses ground despite everything
Although this news is quite positive, Circle continues to lose ground in the stablecoin market. Sure enough, following the momentary USDC depeg in early March, many users turned to alternatives, including USDT or TrueUSD (TUSD).
Since the depeg, due to the bankruptcy of the Silicon Valley Bank (SVB), USDC posts more than $13 billion loss on its market capitalization. USDT, on the contrary, saw its capitalization increase by almost 10 billion dollars, which leads it to represent 72.9% of the stablecoin market on its own.
Market capitalization of USDT (navy blue) and USDC (light blue)
The CCTP protocol being just deployed, it will be necessary to wait a little before seeing if its arrival will allow the USDC to recover a market share. For the moment, the latter is supported by various bridges such as LayerZero, Celer, Hyperlane, LI.FI, MetaMask, Multichain, Rarimo, Router, Socket, Wanchain or even Wormhole.
Also, although only Ethereum and Avalanche are supported at this time, Circle has announced that other blockchains and other networks are expected to welcome the Cross-Chain Transfer Protocol later in 2023.
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Source: Press Release
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