Circle Launches Bridged USDC Standard to Streamline Stablecoin Launch
Circle, the digital currency payment company, has introduced a new standard to simplify the process of launching its stablecoin, USDC, on new networks. In a blog post on November 21, Circle announced the release of the “bridged USDC standard,” which allows developers to launch the token through a two-phase process.
The Two-Phase Process
In the first phase, a third-party developer has control of the token contracts, and the token on the new network is backed by a native version on another network. This initial token is considered unofficial and is not issued or redeemable by Circle. However, it serves as a proxy to USDC that can be used in any ecosystem where bridging is possible.
If Circle and the third-party developer decide to make the token official, they can seamlessly upgrade to native issuance in the future, transitioning the token to an official version. This transition is made in the second phase of the process, where Circle takes control of the contracts and the token becomes directly backed by Circle’s reserves. It’s important to note that not all deployments may proceed to the second phase.
Eliminating the Need for Migrations
Circle is releasing the bridged USDC standard to eliminate the need for “migrations.” With the new standard, users no longer have to swap an unofficial version of USDC for an official version after it becomes available. Instead, the unofficial tokens already held in a user’s wallet can become official without the need for extra steps.
In order to use the standard, developers must follow the guidelines outlined in the standard’s Github documentation. It requires the use of a bridge with upgrade functionality for specific functions and prohibits upgrading the bridge once the token is issued.
Transitioning to Official Version
Once the decision is made to transition the token to an official version, the third-party developer can freeze new mints on the bridge and reconcile any in-flight bridging activity to harmonize the total supply of native USDC. The ownership of the contract can then be transferred to Circle. As a result, the native coins backing the tokens on the new network will be burnt, ensuring that the new network’s tokens are directly backed by Circle’s reserves.
Circle previously launched a native Base network version of USDC in September. In October, they did the same for Polygon, further expanding the availability and reach of their stablecoin.
With the introduction of the bridged USDC standard, Circle aims to streamline the process of launching USDC on new networks, while reducing fragmentation and providing users with a more seamless experience.