In a move towards harnessing the Layer 2 ecosystem, Circle, the leading stablecoin issuer, is setting the stage for the native launch of the popular stablecoin USDC on Arbitrum. The stablecoin will go live on the layer 2 network on June 8, 2023. The move is a part of Circle’s proactive approach to optimizing USDC’s interoperability on Layer 2 solutions, particularly on the Arbitrum platform, an Ethereum Layer 2 scaling solution.
As part of this initiative, USDC issued by Circle would become the standard version within the Arbitrum ecosystem. It woild gradually displace the presently circulating “bridged USDC,” which is sourced from Ethereum. The transition is anticipated to lead to an increase in native USDC liquidity over time, marking a new chapter in the transactional dynamics of USDC on the platform.
Circle has highlighted multiple benefits of this transition for end-users. For instance, native USDC wouldbe fully reserved, offering a 1:1 redemption rate with US dollars. The move would also facilitate institutional on and off-ramps through Circle and its partners, thereby broadening access to the platform for larger market players. Notably, native USDC would support upcoming features designed to eliminate bridge withdrawal delays, enhancing transactional efficiency on the platform.
Furthermore, in anticipation of the launch, Circle would rename the Ethereum-bridged version of USDC on block explorers to “USDC.e.” The change is aimed at clarifying the distinction between the upcoming native USDC and the existing bridged form, aiding users in distinguishing between the two types of USDC in circulation.
Meanwhile, to ensure a seamless transition of liquidity from bridged to native USDC, the Arbitrum Foundation would collaborate with ecosystem applications. The Arbitrum Bridge, a critical tool for bridging USDC to and from Ethereum, would maintain its regular operations throughout this process, safeguarding against any potential disruptions for existing users.
Following the launch of native USDC, Circle also plans to introduce the Cross-Chain Transfer Protocol (CCTP) to Arbitrum. This feature would allow USDC to move natively between Ethereum and other supported chains within minutes, eliminating the current withdrawal delays and further streamlining operations.
