Circle is aiming to strengthen USDC’s market position, as competition with rival issuers Tether and Binance heats up. Decentralized finance platforms are creating their own stablecoins. Circle Internet Financial, the issuer of the second-largest stablecoin USD Coin ( USDC), is expanding USDC to five additional blockchains to improve its market position and increase access across multiple chains.
Circle also revealed a Cross-Chain Transfer Protocol tool to increase USDC transactions between different blockchains.
Circle announced the plan Wednesday at the Converge22 conference held in San Francisco.
A statement stated that USDC will circulate on the arbitrum One and NEAR chains by the end this year. Plans to join the Cosmos ecosystem in the early 2023 are also announced.
Circle’s growth comes at a time when stablecoins, cryptocurrencies that are pegged to a currency like the U.S. dollars, are gaining popularity. Stablecoins, a class of assets that cryptocurrencies make up \$150 billion, serve as a bridge between traditional finance and crypto space for trading and transactions. USDC is the 2nd largest stablecoin and is widely used on Decentralized Finance ( DeFi).
However, USDC’s market position is under threat. It has seen a decline in market share and its circulating supply dropped to $49 Billion from $55 Billion since August. DeFi platforms have created or issued their own native stablecoins while Tether and Binance, rivals and top-issuers, both increased their stablecoins USDT and USDD.
Circle wants to increase USDC’s availability on crypto networks according to Joao Reginatto (Circle’s vice president for product).
Reginatto stated in a statement that “extension multi-chain support USDC opens up the door for institutions exchanges developers and more to innovate, and have easier access a trusted, stable digital dollar.”
USDC will now be available on 14 blockchains. It was previously issued on Algorand and Avalanche, Ethereum. According to Tether’s website, its main competitor, the \$68 trillion USDT, circulates across 13 chains and is expected to expand to Polygon.
The transfer protocol works via a mint and burn mechanism. Bridging contracts will facilitate the process. Sending USDC from one chain (or another) will cause the tool to destroy (burn) the transferred money and create (mints the same amount) on the destination chain.
It will first be available on Avalanche and Ethereum blockchains. Then, it will be expanded to all chains that have USDC.