Wormhole has integrated with Circle’s Cross-Chain Transfer Protocol (CCTP) to allow smoother transfers of USD Coin (USDC) between several blockchains. This move enables the transfer of USDC across Ethereum, Avalanche, Arbitrum, and Optimism via Wormhole-based bridges. The functionality will be available through the Portal bridge, and developers can incorporate it using Wormhole Connect.
The integration aims to mitigate issues associated with liquidity and user confusion. With multiple versions of bridged USDC tokens potentially existing on newer chains, this could result in fragmented liquidity and a convoluted experience for both developers and users. CCTP addresses this by facilitating a natively cross-chain USDC.
Historically, when USDC, initially issued on Ethereum, needed to be transferred to a different chain, users had to rely on a bridge to lock their Ethereum-native USDC and mint a corresponding version on the target chain. With various bridging protocols and multiple derivative versions of USDC, this often led to user confusion.
To address this, Circle, in 2021, extended its stablecoin reach to Stellar and, subsequently, other chains, bringing the tally to 14 compatible networks as of September 20. However, users wanting to transfer native USDC across networks were previously required to use a Circle partner’s account for both deposit and withdrawal actions, making the process cumbersome.
Circle introduced CCTP on April 26 as a solution to this problem. It comprises smart contracts and an API, allowing users to burn USDC on one blockchain and re-mint it on another without the need to interact with a Circle partner account. Initially, the CCTP was available for transfers between Ethereum and Avalanche, but its capability has since been expanded to cover the Optimism and Arbitrum networks, with plans to onboard more networks in 2023.
The recent announcement highlights that Wormhole users, with the CCTP integration in the Wormhole bridge interface, can now transfer native USDC across the CCTP-compatible chains. It’s worth noting that other bridges like Wanchan offer similar functionalities, and several others like Celer, Hyperlane, LayerZero, and LI.FI has expressed intentions to incorporate CCTP in the near future.
Via: 2Usethebitcoin.com
