Have you heard? Circle is implementing a protocol that will aid in the development of more scalable, efficient, secure, and user-friendly USDC-based apps.
Circle CEO Jeremy Allaire said on Twitter that the company’s Cross-Chain Transfer Protocol (CCTP) would be available soon. This architecture enables the development of more scalable, efficient, secure, and user-friendly USDC-based applications.
According to official figures, Circle issued 5.6 billion USDC, redeemed 6.5 billion USDC, and the circulation declined by approximately $900 million between January 12 and January 19. The overall circulation of USDC was $43.1 billion as of January 19, and the reserve was $43.2 billion, consisting of $9.5 billion in cash and $33.7 billion in short-term US treasury bonds.
What is CCTP?
Instead of using a traditional “lock-and-mint” bridge, which involves locking native USDC on the source chain (which could be a security risk) and minting a synthetic or bridged version of USDC on the destination chain (which leads to liquidity fragmentation and a poor user experience), CCTP can be used instead.
Smart contracts will publicise the protocol, which can delete native USDC on the source chain and mint the equivalent amount of native USDC on the destination chain. Circle claims their service offers the most cost-effective method for transferring USDC between blockchains.
How Does It Work?
There are three ways to use CCTP:
- Burn USDC on the source chain: A user visits an app to initiate a transfer of USDC from one blockchain to another and specifies the recipient wallet address on the destination chain. This transfer of USDC occurs after the user has burned USDC on the source chain. The app makes it possible to burn the total amount of USDC defined on the source chain.
- Mint USDC on the destination chain: It will be done with the help of the attestation, which is used by the app to initiate the creation of USDC. On the chain of destination, the amount of USDC that was provided is mined, and then it is transmitted to the wallet address of the recipient.
- Get an attestation signed by Circle: Circle keeps an eye on the source chain and attests that a burn event has occurred there. The app sends a request to Circle for attestation, and Circle responds by granting permission to mint the amount of USDC on the destination chain.
This year in Circle’s Q1, CCTP will be launched on the Ethereum and Avalanche mainnets.