Circle to Launch USDC Natively on Arbitrum
- USDC briefly lost its peg following Circle’s exposure to Silicon Valley Bank.
- The Ethereum-based version of USDC will be renamed “USDC.e.”.
Stablecoin issuer Circle will launch its USDC stablecoin natively on Arbitrum on June 8, the company announced on Twitter on Thursday, June 1. Arbitrum, an Ethereum scaling solution, has seen massive adoption in recent months thanks to its lower transaction fees and faster transactions.
Circle noted in a blog post that “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.”
The existing version of the USDC is currently based on Ethereum but will be renamed “USDC.e.” ahead of the launch on Arbitrum. According to Circle, the move to Arbitrum seeks to leverage cross-chain transfer protocols (CCTPs) to accelerate transactions. The stablecoin issuer noted that “this will enable USDC to move natively to-and-from Ethereum (and other supported chains) in minutes.”
Both Circle and Arbitrum stand to gain significantly from their partnership. The introduction of native USDC on Arbitrum opens up a new market for Circle and broadens the use and acceptance of its stablecoin. The partnership is anticipated to significantly increase USDC’s growth and adoption given the rising popularity and demand for stablecoins.
Furthermore, having a widely accepted and reliable stablecoin like USDC on Arbitrum will make it simpler for programmers to create decentralized apps (dApps) on the network and carry out transactions with increased effectiveness and dependability.
Is USDC losing its grip?
Circle and its USDC stablecoin have made headlines for unfavorable reasons this year. USDC lost its peg after news emerged that Circle had a $3.3 billion exposure to the embattled Silicon Valley Bank. USDC has also seen a huge reduction in its market capitalization. USDC boasted a $54 billion market cap but currently has a valuation of $28 billion, which is nearly half of what it was last year.
USDC and other stablecoins are pegged to fiat currencies such as the US dollar. However, recent data suggest that there has been a significant decline in interest in using USDC. However, Tether’s USDT stablecoin seems to have gained more users as its market cap increased from 47.04% in 2022 to 65.89% in 2023, bringing its market value to around $83 billion.