Stablecoin Issuer Circle Rolls Out Cross-Chain Transfer Protocol (CCTP)

Stablecoin Issuer Circle Rolls Out Cross-Chain Transfer Protocol (CCTP)

Time Stamp: April 26, 2023 9:13 AM
Source Node: 2611141

Circle's new Cross-Chain Transfer Protocol removes the need to bridge USDC "via traditional lock-and-mint approaches." 

Circle, the stablecoin issuer behind USD Coin (USDC), has introduced a Cross-Chain Transfer Protocol (CCTP) to transfer USDC between Ethereum and Avalanche networks.

The brand-new CCTP, unveiled on April 26th, eliminates the need for USDC bridges, streamlining the transfer process for users.

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Previously, those wanting to move their USDC from Ethereum to Avalanche had to go through a Circle partner or use third-party bridges.

However, Circle's newest development is designed to eliminate this need. In contrast to conventional bridges that lock tokens, CCTP eliminates tokens on the sending network and mints new ones on the receiving end. Users can then directly convert these new tokens into bank deposits by working with Circle or its partners.

According to Circle, CCTP aims to tackle the "fragmentation" issue in the Web3 ecosystem. The company highlighted that there are several unofficial versions of USDC circulating across multiple networks.

Circle expects that the introduction of CCTP should gradually reduce the usage of these unofficial versions, simplifying the overall USDC experience.

Major cross-chain protocols have already committed to adopting CCTP, including companies like Celer, Hyperlane, LayerZero, LI.FI, MetaMask, and Wormhole.

Joao Reginatto, Circle's VP of Product, believes that the innovative protocol will enhance liquidity and capital efficiency within the decentralized finance space. When commenting on the new project, Reginatto noted:

CCTP helps to solve today's DeFi liquidity and capital inefficiency issues due to the risks and fragmented nature of bridged assets. 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.

Circle's Cross-Chain Transfer Protocol is set to revolutionize USDC transfers between Ethereum and Avalanche, simplifying the process and fostering a more seamless user experience.

In other Circle-related news, the company's CEO claims that the crackdown on cryptocurrencies by US regulators is the main reason behind the decreasing market capitalization of USD Coin.

Gile K. - Crypto Analyst

by Gile K. - Crypto Analyst, BitDegree

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