Circle Introduces New Bridged USDC Standard
Circle has announced a new standard aimed at simplifying the process of launching its stablecoin, USDC, on new networks, the company revealed in a blog post. The new standard, known as “bridged USDC standard”, streamlines the token launch process through a two-phase approach. In the first phase, third-party developers are in control of the token contracts, with the token on the new network being backed by a native version on another network. In the second phase, Circle takes over the contracts, and the token becomes directly backed by Circle’s reserves, although this second phase is not always necessary.
According to the company, the initial token produced will be unofficial and not redeemable by Circle. However, it serves as a proxy to USDC that can be extended to any ecosystem where bridging is feasible. If both parties decide they want to make the token official, an upgrade to native issuance can seamlessly take place in the future.
The Elimination of Migrations
Circle is releasing the new standard to totally eradicate the need for migrations, ensuring that unofficial versions of USDC do not need to be swapped for official versions after they are made available. By utilizing the new standard, unofficial tokens held in a user’s wallet can transition to official status without the need for migration. This will significantly simplify the process for developers and users.
Implementation and Transition Process
Developers utilizing the standard are required to use a bridge with upgrade functionality for specific functions and are advised against upgrading the bridge once the token is issued. If the decision is made to make the token an official version, Circle and the developer can freeze new mints on the bridge and reconcile bridging activities to align with the total supply of native USDC. After the transition, the tokens on the new network will be backed by Circle’s reserves.
Circle’s Recent Offerings
Coinciding with the launch of the bridged USDC standard, in September, Circle also introduced a native Base network version of USDC. Additionally, in October, it rolled out the same for Polygon.
Hot Take: A Game Changer in the Stablecoin Ecosystem
The introduction of Circle’s bridged USDC standard represents a significant breakthrough in the stablecoin industry, making it easier for new networks to adopt the USDC stablecoin without the need for complex migrations or swaps. This innovation is expected to streamline the issuance process and expand the accessibility of USDC across various blockchain ecosystems.
Circle has launched a new standard to streamline the process of launching its stablecoin, USDC, on new networks, according to a Nov. 21 blog post.
The new “bridged USDC standard” allows developers to launch the token through a two-phase process. In the first phase, the third-party developer has control of the token contracts, and the token on the new network is backed by a native version on another network. In the second phase, Circle takes control of the contracts, and the token becomes backed directly by Circle’s reserves. The second phase may not occur with all deployments.
Introducing Bridged USDC Standard, a new way to expand access to $USDC & reduce fragmentation.
EVM blockchain & rollup teams can now deploy a bridged USDC token contract with optionality for Circle to seamlessly upgrade to native issuance in the future.https://t.co/suSgllMQoQ
— Circle (@circle) November 21, 2023
According to the post, the token produced in the first phase will be “unofficial and not issued nor redeemable by Circle,” but will serve “as a proxy to USDC that’s extensible to any ecosystem where bridging is made possible.” If Circle and the third-party developer later decide they want to make the token official, they can “seamlessly upgrade to native issuance in the future.”
Circle said it’s releasing the standard to eliminate the need for “migrations,” where users must swap an unofficial version of USDC for an official version after it becomes available. If developers use the new standard, migrations should become unnecessary, as it allows the unofficial tokens already held in a user’s wallet to become official.
The standard’s Github documentation requires developers to use a bridge with upgrade functionality for specific functions and refrain from upgrading the bridge once the token is issued.
Once the developer and Circle decide to transition the token to an official version, the third-party developer can freeze new mints on the bridge and “reconcile in-flight bridging activity to harmonize the total supply of native USDC.” Ownership of the contract can then be transferred to Circle, at which point the native coins backing the tokens on the new network will be burnt, causing the new network’s tokens to be backed directly by Circle’s reserves.
In September, Circle launched a native Base network version of USDC. In October, it did the same for Polygon.
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