Circle activates protocol for stablecoin transfers between Ethereum and Avalanche
Quick Take
- Circle released the Cross-Chain Transfer Protocol (CCTP) for Ethereum and Avalanche chains.
- CCTP enables movement of USDC stablecoin between blockchains.
Circle, the creator of the USD Coin stablecoin, released the Cross-Chain Transfer Protocol (CCTP) for Ethereum and Avalanche chains, enabling users to move their USDC stablecoin between the two blockchains.
This protocol facilitates the transfer of USDC across different blockchain networks by burning native USDC on one chain and minting the same amount on another, making asset transfers possible, according to the official developer FAQ page.
"CCTP removes the need to bridge USDC via traditional lock-and-mint approaches, improves liquidity across the blockchain ecosystem, and enables developers to provide their users a seamless and secure experience moving USDC natively across chains," Circle said in a tweet.
Bridge projects and interoperability-focused protocols like Celer Network, Layer Zero, Li.Fi, Multichain, Router Protocol, and others have already integrated the protocol to let users move USDC via their interfaces, Circle said. Circle previously noted that, in addition to Ethereum and Avalanche, CCTP will be available on other blockchain networks in the future.
Circle's USDC is the second-largest stablecoin in the crypto market with a total supply of nearly $29 billion.
Circle boosts security of cross-chain stablecoin transfers
With CCTP, Circle has offered a more secure option for transferring stablecoins from one chain to another than what's available through cross-chain bridges. It allows for the flow of USDC across chains through a native mechanism of burning and minting, an approach that eliminates the need for wrapping-based bridges.
Typically, bridges enable users to move stablecoins between blockchains using "wrapping," a mechanism considered somewhat vulnerable to hacks. Last year, a significant portion of crypto hacks stole funds from bridges that relied on wrapping.
Wrapping in the context of blockchain and cryptocurrencies refers to the process of converting one cryptocurrency into another by creating a 1:1 pegged representation of the original asset on a different blockchain. This conversion allows users to move assets between blockchains.
(Updates with additional background on bridges and wrapping.)
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