Circle Announces Arbitrum Support for USDC Stablecoin

USDC Supports Arbitrum

The US company Circle, which issues the stablecoin “USD Coin (USDC)”, announced on the 1st that it will start supporting Arbitrum. USDC will be officially available on Arbitrum, Ethereum’s L2 scaling solution, starting June 8.

As a background, until now, USDC issued on Ethereum has been bridged to Arbitrum and used in DeFi (decentralized finance) applications.

From now on, USDC will be issued directly on the Arbitrum network. This promises to secure the underlying assets, which can be exchanged for US dollars on a 1:1 basis at any time. In addition, Circle’s cross-chain transfer protocol (CCTP) will be applied, enabling speedy cross-chain remittances.

With this change, the existing bridge version of USDC will be renamed to “USDC.e” and the newly born native token will inherit the name “USDC”. Liquidity on the Arbitrum network is expected to shift from ‘USDC.e’ to the new ‘USDC’.

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Stablecoin market trends

CCTP is a protocol developed by Circle to seamlessly transfer assets between different blockchains, and uses a “burn and mint” method. This is a method of burning USDC on the source blockchain and creating new USDC on the destination blockchain.

Currently, Circle has Ethereum (ETH), Algorand (ALGO), Solana (SOL), Stellar (XLM), Tron (TRX), Hedera Hashgraph (HBAR), Avalanche (AVAX), Flow (FLOW), Polygon ( MATIC) each block chain supports the direct issuance of USDC.

According to data site CoinGecko, USDC has a market capitalization of 400 billion yen, down significantly from its peak of 760 billion yen. USDC’s market share as a stablecoin also shrunk from 34.88% to 23.05%. The main factors are the banking crisis that occurred in the United States and the heightened uncertainty of US regulations.

The banking crisis refers to the series of events in which three crypto-enabled banks, including Silicon Valley Bank, where Circle held its USDC reserves, failed or were shut down by regulators. Due to this situation, the linkage (peg) of USDC with the US dollar was temporarily lost, which undermined the credibility of USDC and accelerated the withdrawal behavior from USDC to other assets considered safe among users. rice field.

In addition, Circle CEO Jeremy Allaire said in an interview with Bloomberg TV that the increasing uncertainty of regulation of cryptocurrencies in the United States has become a major concern globally. For example, in February 2023, the New York State Department of Financial Services (NYDFS) issued an order to suspend the issuance of the U.S. dollar stablecoin Binance USD (BUSD). BUSD’s market share plummeted from 11.68% to 4.18% over the past year.

In contrast, stablecoin Tether (USDT) surged in market share from 47.04% to 65.89% over the past year. At the time of writing, the market capitalization of USDT has reached 1.15 trillion yen.

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