🌉Bridged USDC

Filenova USDC adopts rules that meet the Bridged USDC Standard, which can be upgraded to native USDC in the future

Reference:https://www.circle.com/blog/bridged-usdc-standard

Permissionless composability is one of the hallmarks of Web3, contributing to the rapid growth of new applications and blockchain networks by leveraging existing open technology. Circle’s USDC is no exception, stemming from the innovations of the ERC-20 standard and countless third-party frameworks to become the trusted dollar-backed stablecoin that it is today.

As of November 2023, USDC is issued and circulating natively on 15 blockchains – 7 more than last year – and yet it is also clear to Circle and the broader community that many more blockchains may emerge and rise to prominence over the next several years. These new blockchains could benefit significantly from having access to USDC.

Native USDC vs. Bridged USDC

As we all know, native USDC provides unique advantages over bridged forms of USDC. Native issuance of USDC means that developers and users can trust that the asset they're using is fully reserved and always redeemable 1:1 for US dollars. Native USDC can be supported in Circle products like Circle Mint and Cross-Chain Transfer Protocol (CCTP), contributing to deeper ecosystem interactions and opportunities.

Interestingly, bridged forms of USDC play a key role in solving the “cold start” problem for generating activity on new blockchain networks. Unlike native USDC, bridged forms of USDC can be spun up quickly by new L1 and L2 rollup teams, in addition to third-party bridge deployers. While bridged USDC is unofficial and not issued nor redeemable by Circle, it serves as a proxy to USDC that’s extensible to any ecosystem where bridging is made possible. This helps developers bootstrap stablecoin liquidity for their applications and enables users to begin exploring new use cases early.

Ideally, Circle could bring native USDC to every secure, safe and promising new blockchain network as soon as it launches. But with the meteoric rise of scaling solutions like L2s/L3s, modular blockchains, and new high performance L1s, Circle faces a significant challenge with ecosystem innovation outpacing the speed of new USDC deployments.

As a result, Circle has often been launching native USDC on new blockchains after a large amount of USDC liquidity had already been bridged by third parties. While it’s true that developers and users can readily migrate from bridged USDC to native USDC, the ideal scenario would be to avoid a migration entirely.

So, how can Circle simultaneously enable an early path to native USDC for new blockchains, solve the cold start problem, and avoid the pitfalls of liquidity fragmentation and lengthy migrations?

This brings us back to permissionless composability and the power of community.