Circle Internet Financial, issuer of the second largest stablecoin, USD coin (USDC), will expand USDC to five new blockchains in an attempt to strengthen its market position and bolster access across multiple chains.
Circle also unveiled a tool called Cross-Chain Transfer Protocol to enhance USDC transactions between different blockchains.
The firm disclosed the plan Wednesday at its Converge22 conference in San Francisco.
According to a statement, USDC will begin to circulate on the Arbitrum One, NEAR, Optimism and Polkadot chains by the end of this year, with plans to enter the Cosmos ecosystem sometime in early 2023.
Circle’s expansion comes as competition among stablecoins – cryptocurrencies pegged to a government-issued currency such as the U.S. dollar – is heating up. Stablecoins are a $150 billion asset class within cryptocurrencies and serve as an important bridge between traditional finance and the crypto space for transactions and trading. USDC is the second-largest stablecoin of its kind and is widely used on decentralized finance (DeFi) platforms.
Read more: How Does USDC Work?
USDC’s market position, however, is being challenged. It has lost considerable market share recently and its circulating supply has dropped to $49 billion from $55 billion since August. A slew of decentralized finance (DeFi) platforms are crafting or have already issued their own native stablecoins, while rival top issuers Tether and crypto exchange Binance both stepped up to expand their own stablecoins, USDT and BUSD, respectively.
Circle aims to bolster USDC’s availability across crypto networks, according to Joao Reginatto, Circle’s vice president of product.
“Extending multi-chain support for USDC opens the door for institutions, exchanges, developers and more to innovate and have easier access to a trusted and stable digital dollar,” Reginatto said in a statement.
As a result of the expansion, USDC will be available on 14 blockchains, having been issued previously on Algorand, Avalanche, Ethereum, Flow, Hedera, Polygon, Solana, Stellar and Tron. Its main rival, the $68 billion USDT, circulates on 13 chains and looks to expand to Polygon, according to Tether's website.
The transfer protocol will work via a mint-and-burn mechanism and be facilitated by bridging contracts. When someone sends USDC from one chain to another, the tool will destroy (burn) the transferred amount on the original chain and create (mint) the same amount on the destination chain.
The tool will debut on the Ethereum and Avalanche blockchains first, then will expand to the rest of the chains where USDC circulates.