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The launch of USDC on Arbitrum will replace the currently circulating bridged version of USDC that comes from Ethereum.
In an announcement on Thursday, June 1, stablecoin issuer Circle announced its plans to launch the native version of its USDC stablecoin on the Arbitrum blockchain network.
USDC on Arbitrum
As per the official announcement, Circle shall replace the existing version of USD Coin, which is an Ethereum-based token bridged to Arbitrum, with a native token that runs and resides on the Arbitrum network.
The official blog post reads:
“This will be the official version of USDC that is recognized within the Arbitrum ecosystem and will ultimately replace the currently circulating bridged version of USDC that comes from Ethereum.”
Ahead of the launch next week on June 8, Circle plans to rename the existing Ethereum-based version of USDC to “USDC.e”. Post that, the original version shall be listed as “bridged USDC”. On the other hand, the new Arbitrum-based version will get the “USDC” mantle.
The goal behind this shift to Arbitrum is to speed up transactions using the cross-chain transfer protocols (CCTPs). Basically, CCTPs are responsible for the handling of the transfer of assets between the blockchains. Besides, it also allows users to unify liquidity. The good thing about the CCTP protocols is that they support both Web3 and crypto assets across portfolios.
The Arbitrum team said:
“This will enable USDC to move natively to-and-from Ethereum (and other supported chains) in minutes, and no more withdrawal delays.”
It added: “Arbitrum will be working with ecosystem apps to provide a smooth transition of liquidity from bridged USDC to native USDC over time. There will be no immediate changes to the Arbitrum Bridge, and it will continue to operate normally for bridging USDC to and from Ethereum”.
Circle and the Stablecoin Market
After the crypto winter of 2022 and overall market activity, the market for stablecoins remains quite subdued. Circle has also faced the heat of the changing market conditions.
Over the last year, Circle’s market share has been declining significantly. After hitting a high of $55 billion market cap last June 2022, Circle’s USDC has seen its market cap now dropping under $30 billion.
In another development, amid the current US debt ceiling showdown, Circle ditched all US Treasury bonds from its USD Coin (USDC) backing reserves. This came just ahead of the US Senate finalizing on raising the debt ceiling.
Circle also faced a major blow earlier this year amid the US banking crisis during the fall of crypto-friendly banks Silvergate Capital and Signature Bank. At this time, Circle lost its peg with the US Dollar for some time, leading to massive withdrawals. However, the stablecoin issuer handled the situation well thereafter.