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Cryptogambling / Circle Introduces USDC Transfer Protocol For Cross-Chain Transactions

Circle Introduces USDC Transfer Protocol For Cross-Chain Transactions

Olumide
Olumide
Publish Date: 01/05/2023

US dollar coin creator, Circle, has launched a mainnet protocol that allows traders to transfer USDC between Ethereum and Avalanche.

The announcement on 26 April says that the new protocol burns coin on the sending chain and mint new ones on the receiving chain as against the former procedure where users have to deposit their coin with a Circle partner or use a third-party bridge to make the transfer.

The new Cross-Chain transfer Protocol (CCTP), is doing away with the need for USDC bridges.

In a video released on Youtube, the team explained that this new protocol does not lock tokens sent to its contacts, unlike the traditional bridge. in contrast, the protocol destroys these tokens and issues new ones on the receiving network. users can then redeem these tokens for bank deposits.

Video: Circle’s Cross-Chain Transfer Protocol - Demo - Converge22

Circle’s Cross-Chain Transfer Protocol – Demo – Converge22

What problems Does the Protocol Solve?

One problem that the protocol seeks to solve is “fragmentation”. According to the team, There are numerous unofficial variations of USDC floating about on different networks, the majority of them are the result of bridges between tokens on other networks.

The team anticipates that the use of those unauthorised copies will gradually reduce now that there is a formal means to transfer money from one network to a different one making the token easier to use.

Joao Reginatto, Circle’s vice president of the product, he thinks the new system will enhance the efficiency of capital and liquidity in financial systems that are decentralized:

With CCTP, developers can simplify the user experience and their users can trust that they are always transacting with a highly liquid, safe and fungible asset in native USDC.”

Users can create an account to deposit funds with Circle or one of its partners, like Coinbase, to create USDC. They can then receive the coin on numerous networks, including Ethereum, Avalanche, Stellar, and Polkadot, after completing this step.

Lapses of Former Procedure

Over the past few years, bridge hacks have caused users to lose billions of dollars worth of USDC and other cryptocurrencies, as attackers have repeatedly learned how to eliminate locked coins from bridge contracts as well as leave their copies on the other side of the network without any backing. Developers are now unsure of how to safeguard bridges for potential use as digital assets gain greater popularity.

Key Takeaway

  • Circle’s new Cross-Chain Transfer Protocol enables USDC transfers between Ethereum and Avalanche without the need for bridges.
  • The new protocol removes fragmented USDC variations caused by unofficial bridges between different networks.
  • The new protocol for transferring USDC enhances safety, reliability, and efficiency in decentralized financial systems, and addresses the vulnerabilities of the former procedure.

Conclusion

The launch of CCTP is a significant step forward in the evolution of decentralized finance, and it will be interesting to see how this new protocol shapes the future of digital asset trading, transfer and other technology developments. Additionally, the protocol enhances the efficiency of capital and liquidity in decentralized financial systems, which is vital for the growth and sustainability of the digital asset ecosystem.

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