USDC is the second-largest stablecoin in the world and Circle, the company behind it, made an announcement on Wednesday.
It said that its USDC stablecoin would soon become available on five new blockchains. Nikhil Chandhok, the Chief Product Officer of the company made the announcement.
He disclosed that the stablecoin would be compatible with Polkadot, Optimism, NEAR, Cosmos and Arbitrum by early next year.
Stablecoins are cryptocurrencies that are usually pegged to the value of a fiat currency backed by a government, mostly the US dollar, as in the case of Circle’s USDC.
Real world assets and cash are usually kept as collateral for stablecoins, which is beneficial because it protects them from the volatility associated with the crypto market.
This is one of the top reasons that the popularity of stablecoins has increased amongst traditional financial institutions that are dipping their toes in the crypto market.
Jao Reginatto, the VP of Product at Circle, said that offering multi-chain support for their stablecoin would provide developers, exchanges and institutions, and others to innovate.
Plus, they can also have access to a stable and trusted digital dollar. The company said that by the end of the year, USDC would be compatible with Polkadot, Optimism, NEAR, and Arbitrum.
As far as Cosmos is concerned, it will become compatible with the blockchain by early next year.
The announcement was made at the Converge22 conference of the company and this expansion would mean that the USDC stablecoin will now be compatible with a total of 14 blockchains.
The other blockchains that already offer support for the USDC stablecoin include Stellar, Hedera, Flow, Algorand, TRON, Avalanche, Polygon, Solana and Ethereum.
Circle’s leadership also announced that they were launching a Cross-Chain Transfer Protocol for the stablecoin aimed at streamlining crypto transactions across blockchains.
Developers will specifically use the protocol for creating apps, wallets and financial services tools, which can enable the seamless transfer of the USDC stablecoin across various networks.
The new protocol
According to the company, the current mechanisms that exist for conducting USDC transfers across blockchains are extremely complicated for users and offer fragmented liquidity.
With the introduction of the Cross-Chain Transfer Protocol, USDC would be able to function in the same way as the universal dollar across different ecosystems.
This would offer the most efficient way of transferring value throughout the crypto ecosystem. By the end of the year, this protocol will be rolled out on Avalanche and Ethereum.
Compatibility with other blockchains will be introduced in the next year. The primary competitor of the USDC stablecoin is Tether’s USDT.
It is the largest stablecoin in terms of market capitalization and is currently supported on 13 blockchains. The stablecoin will also expand to Polygon in the future.
The implosion of the algorithmic stablecoin TerraUSD (UST) has increased the importance of stablecoins like USDT and USDC because these are asset-backed.
There were no assets backing UST due to which it wiped out almost $60 billion from the crypto market, as its sister token LUNA also collapsed.