Circle has launched a new standard to streamline the process of launching its stablecoin, USDC, on new networks, according to a Nov. 21 blog post.
The new “bridge USDC standard” allows developers to launch the token through a two-phase process. In the first phase, the third-party developer is in control of the token contracts and the token on the new network is backed by a native version on another network. In the second phase, Circle takes control of the contracts and the token is directly backed by Circle reserves. The second phase may not occur with all deployments.
Introducing Bridged USDC Standard, a new way to expand access to $USDC and reduce fragmentation.
EVM’s blockchain and rollup teams can now implement a bridging USDC token contract with the option for Circle to seamlessly upgrade to native issuance in the future. https://t.co/suSgllMQoQ
– Circle (@circle) November 21, 2023
According to the post, the token produced in the first phase will be “unofficial and will not be issued or redeemable by Circle,” but will serve “as a proxy for USDC that is extensible to any ecosystem where the bridge is possible.” If Circle and the third-party developer later decide they want to make the token official, they can “seamlessly upgrade to native issuance in the future.”
Circle said it is releasing the standard to eliminate the need for “migrations,” where users must swap an unofficial version of USDC for an official version once it is available. If developers use the new standard, migrations should become unnecessary as it allows unofficial tokens already in a user’s wallet to become official.
The standard’s Github documentation requires developers to use a bridge with update functionality for specific functions and to refrain from updating the bridge once the token is issued.
Related: Stablecoin issuer Circle weighs 2024 public launch: report
Once the developer and Circle decide to transition the token to an official version, the third-party developer can freeze new mints on the bridge and “reconcile bridge activity in flight to harmonize the total native USDC supply.” Ownership of the contract can then be transferred to Circle, at which point the native currencies backing the tokens on the new network will be burned, causing the new network’s tokens to be directly backed by Circle reserves.
In September, Circle launched a native Basenet version of USDC. In October it did the same with Polygon.