Centre, the collaboration between Coinbase and Circle that administers the USDC stablecoin, announced Wednesday a framework for multi-chain support for USDC. Algorand will be the first non-Ethereum blockchain to deploy support for USDC, the first in what’s likely to be a long line of protocols interested in integrating the world’s second-most popular stablecoin.
Exciting milestone for Circle and USDC announced today! https://t.co/CEHpxQdTSv
— Circle (@circlepay) June 24, 2020
In the announcement, Centre indicated that Algorand was chosen as the first to integrate USDC because the project is optimized for high-volume financial applications. Circle will operate a token bridge allowing USDC on Algorand to be swapped with ERC-20 USDC tokens on the Ethereum blockchain. As with all USDC, the stablecoins on the Algorand protocol will be backed by fiat reserves.
USDC has become a popular and important stablecoin asset in the Ethereum ecosystem. It was used to help stabilize the Maker protocol following the March 2020 crypto crash, officially accepted for tax payments in Bermuda, and has helped facilitate margin trading on Binance and other exchanges.
“As more financial institutions and enterprises look to build decentralized financial applications, they need a well-suited infrastructure and a compliant, regulated, and widely accepted stablecoin,” Algorand Foundation COO Fangfang Chen said in a press release.
“We are excited to partner with Circle to provide financial institutions with the tools they need to leverage the unique benefits of USDC and offer enterprise-grade solutions to build real-world use cases.”
The story of USDC has also become something of a cautionary tale for the concerns surrounding centralized assets, even if they are pegged to the world’s reserve currency.
In October 2019, Coinbase started offering rewards for storing USDC in Coinbase accounts that were comparable to interest rates from some of the legacy banking industry’s most generous participants. Eight months later, reward rates were unceremoniously slashed nearly 90% with only a day’s warning, leaving many USDC loyalists scratching their heads.
In the announcement, Centre called for additional interested blockchain projects to reach out to discuss implementation of the new multi-chain framework, but did not disclose any additional existing or upcoming partnerships. Earlier this year, Tether was also added to the Algorand blockchain.