Circle, the developer of the USDC stablecoin, is set to introduce a native version of its token on the Arbitrum network. The move aims to enhance transaction speeds and improve interoperability within the blockchain ecosystem. Circle has scheduled the launch of the new native version of USD Coin for June 8.
Transitioning to a Native USDC on Arbitrum
In an official blog post, Circle outlined its plan to replace the existing version of USD Coin, which is currently an Ethereum-based token bridged to Arbitrum.
The new native token will operate directly on the Arbitrum network and will become the official version of USDC within the Arbitrum ecosystem. This transition will eventually phase out the bridged version of USDC originating from Ethereum.
Circle’s adoption of the Arbitrum network aims to expedite transactions through the utilization of cross-chain transfer protocols (CCTPs). These protocols facilitate the transfer of assets between blockchains and promote liquidity unification. By enabling USDC to move natively to and from Ethereum and other supported chains, Circle anticipates faster transfer times, eliminating withdrawal delays.
USDC market cap at $28.9 billion | Source: Market Cap USDC on TradingView.com
Stablecoin Market Trends and Circle’s Strategy
The decision to launch a native version of USDC on Arbitrum comes amidst a challenging market environment for stablecoins. Many companies operating in the space have experienced market share decline over the past year, and Circle is no exception. CoinGecko data reveals a decrease in USDC’s market capitalization from $55 billion to $29 billion over the specified period.
However, one notable exception to this trend is Tether (USDT), whose market share has actually grown, and its USDT stablecoin has reached a market capitalization of over $83 billion.
Circle’s move to introduce a native version of USDC on the Arbitrum network represents an effort to enhance transaction speeds and foster interoperability within the cryptocurrency ecosystem. By leveraging cross-chain transfer protocols, Circle aims to streamline the movement of USDC between Ethereum and other supported chains.
USDC is currently the second-largest stablecoin in the crypto market and the fifth-largest cryptocurrency. It currently sits at a market cap of $28.9 billion.
The stablecoin had lost its peg to the US Dollar back in May when it revealed it held around $3.3 billion in reserves in Silicon Valley Bank (SVB) which collapsed earlier in the year. However, it regained its peg shortly after and has maintained it ever since.
As the stablecoin market evolves, it remains to be seen how this strategic decision will impact Circle’s market position and the broader adoption of USDC.
Featured image from Ledger Insights, Chart from TradingView.com