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Wormhole has incorporated Circle’s Cross-Chain Transfer Protocol (CCTP), enabling USD Coin (USDC) to be moved between Ethereum, Avalanche, Arbitrum, and Optimism through Wormhole-based bridges, as announced on Sept. 20.
This new functionality is accessible to end-users via the Portal bridge, and developers can embed it into their applications using Wormhole Connect.
The Wormhole team stated that this integration aims to alleviate liquidity challenges and user confusion. “On these new and emerging chains, numerous variants of these bridged USDC tokens may exist,” they explained, “which can result in fragmented liquidity, suboptimal pricing, and a perplexing experience for both users and developers.” CCTP is designed to address this issue by “creating a natively cross-chain USDC that can be burned and minted across connected chains,” they noted.
When Circle initially launched USDC, it was exclusively available on Ethereum. If a user wished to transfer USDC to a different chain, they had to utilize a bridge to lock their native USDC on Ethereum and mint a derivative version on the alternate chain. However, the presence of various bridging protocols with different derivative versions of USDC could sometimes lead to confusion among end-users.
In 2021, Circle expanded its stablecoin to a second chain, Stellar. It continued to roll out on additional chains thereafter, increasing the total number of compatible networks to 14 as of Sept. 20.
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Yet, for a user to move native USDC from one network to another, they still needed to deposit their coins into a Circle partner’s account and then withdraw them to another network using that account. Due in part to this complexity, many users opted to use bridged versions of the coin rather than its native iteration.
Related: Stablecoin depegging affected USDC and DAI more than others: Analysts
On April 26, Circle introduced CCTP, which consists of a collection of smart contracts and an application programming interface (API) that allows users to burn USDC on one chain and have it re-minted on another chain without the necessity of depositing into a Circle partner account.
At its inception, CCTP permitted transfers solely between Ethereum and Avalanche or vice-versa. Since then, it has been expanded to include Optimism and Arbitrum networks as well. Circle intends to incorporate additional networks in 2023, according to the protocol’s documentation.
The Sept. 20 announcement indicates that CCTP has now been integrated into the Wormhole bridge interface, enabling Wormhole users to transfer native USDC between CCTP-supported chains for the first time. These networks presently include Ethereum, Optimism, Avalanche, and Arbitrum.
Wormhole is not the only bridge that has adopted or plans to integrate with CCTP. Wanchan offers a similar capability, and according to Circle’s April 26 announcement, Celer, Hyperlane, LayerZero, and LI.FI have also expressed intentions to implement it soon.
