USDC Stablecoin by Circle Set to Embrace Ethereum Scaling Network Arbitrum

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By Degen Lipsa

The US Dollar-backed stablecoin (USDC) will be released by cryptocurrency payments business Circle natively on the Arbitrum network. The news was made early on Thursday morning on Twitter by both Circle and Arbitrum, with the formal launch date scheduled for June 8.

According to L2Beat, one of the most well-liked scaling options for Ethereum is Arbitrum, which accounts for more than 65% of the total value locked on networks with quicker transactions and reduced costs. By “rolling” together groups of transactions on a sidechain, it uses a technique known as optimistic rollup to report back to Ethereum with a single transaction.

Layer 1 blockchains, in this example Ethereum, are layered with Layer 2 networks like Arbitrum, which benefit from the security architecture of the former. These L2 solutions typically see a migration of users looking for lower prices and quicker transactions. However, customers must transfer money from L1 to L2 to accomplish this. This motion is referred to as “bridging.”

Currently, USDC from Ethereum is used by Arbitrum and will soon be known as “USDC.e.” Consider this token to be a receipt that users can exchange for “real” USDC on Ethereum. While there would be no immediate changes to Arbitrum, it is expected to replaced by a native stablecoin launching next week.

There are several advantages of adopting native USDCon the Arbitrum Foundation’s platform, according to an official publication by the foundation. Institutional on- and off-ramps offered by Circle and their partners are among them. Additionally, it means thatUSDC will operate on the Cross-Chain Transfer Protocol (CCTP), which does away with the “lock-and-mint” bridge and mints new USDC for the same value on the destination chain by burning existing USDC on the original chain.

This means that users will burnUSDC on the source chain, wait for Circle’s attestation and confirmation, and then mint fresh tokens on the destination chain, in this case Arbitrum, rather than having locked USDC and minting USDC.e.

This year, USDC and its parent firm, Circle, have made headlines for unfavourable reasons. When Silicon Valley Bank failed, the stablecoin lost its peg, and Circle disclosed a $3.3 billion exposure to the collapsing institution, they came under fire.

This year, USDC and its parent firm, Circle, have made headlines for unfavourable reasons. When Silicon Valley Bank failed, the stablecoin lost its peg, and Circle disclosed a $3.3 billion exposure to the collapsing institution, they came under fire.

Its market capitalization was $54 billion exactly one year ago. Currently, it has a market valuation of $28 billion, which is practically half of what it was yesterday. USDC and other stablecoins are linked to the US dollar. Additionally, because they are designed to maintain a fixed price rather than vary, their market cap and available supply tend to be tightly tied. By the numbers given, there has been a significant decline in interest in the tokens that are created or burned by those who purchase or redeem them.

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