The USDC stablecoin is on the positive side of the news spectrum today, April 26, as founder company Circle reaches a significant milestone with the launch of its Cross-Chain Transfer Protocol (CCTP) on Ethereum and Avalanche.
The announcement, which was made on Circle’s official social media, will mark a new dawn of interoperability in blockchain ecosystems. With that being said, what is Circle’s cross-chain transfer protocol? Is there reason for the hype behind this announcement?
Everything you need to know about the Circle USDC Cross-Chain Transfer Protocol
of the circle official website defines Inter-Chain Transfer Protocol as a permissionless on-chain utility and service that facilitates inter-blockchain stablecoin transfers through two mechanisms, burning and minting this digital asset.
Circle’s cross-chain transfer utility protocol is packed with robust solutions that address liquidity fragmentation issues and poor user experiences linked to unofficial bridge versions of USDC on different blockchain ecosystems.
Prior to the launch of CCTP on the mainnet, Avalanche users looking to move their USDC stored on Ethereum had to use an unofficial or third-party bridge to transfer the stablecoin between networks.
With the launch of the cross-chain transfer protocol, Ethereum and Avalanche users can now take full advantage of Circle’s stablecoin and become less dependent on unofficial and potentially insecure third-party bridges and services.
Circle’s new development and innovation will unify its stablecoin liquidity on Web3 and support simple and secure user payment transactions. It will also connect and unite blockchain networks, further driving blockchain interoperability.
Leveraging Circle’s Cross-Chain Transfer Protocol: How It Works
On April 13, 2023, the Circle team released a demo video on the official page of the YouTube platform, demonstrating to users and the public how the transfer protocol works.
The Youtube demo video shows that the cross-chain transfer protocol first burns, then issues tokens, unlike third-party bridges, which often lock funds on one blockchain and release them on another. This method has been effective but unsafe in recent years.
When taking advantage of Circle’s cross-chain transfer protocol, users must initiate a USDC transfer through an integrated platform or wallet, such as Metamask. The user then specifies the wallet address on the destination chain, after which the portal/bridge burns the stablecoin on the source chain.
Circle then certifies the burn event on the source chain and provides the burn certification and authorization to the decentralized application to mint the USDC amount on the destination chain. After this, the destination chain sends the stablecoin to the recipient.
Circle VP of Product Joao Reginatto blogged mail stating that Circle’s cross-chain protocol is the “most ambitious piece of market-neutral infrastructure”. Joao further said that ecosystem and infrastructure developers had shown their support by integrating CCTP into their platform operations.
Some notable platforms that make up the CCTP include Metamask, Celer Network, LayerZero, Multichain, and Wanchain.
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