Recently, Circle revealed its intention to launch a new native version of USD Coin on the Arbitrum network on June 8.
Both Circle and Arbitrum made the announcement early Thursday morning on Twitter, with the official launch date set for June 8th.
Arbitrum is a popular scaling solution for Ethereum, accounting for over 65% of the total value locked on networks that offer faster transactions and lower fees, according to L2Beat. It uses a method called Optimistic Rollup, which involves bundling transactions on a sidechain before reporting back to Ethereum with a single transaction.
Layer 2 networks, such as Arbitrum, sit on top of Layer 1 blockchains, like Ethereum, leveraging the latter’s security model. Users often migrate to these L2 solutions for faster transactions and lower fees. However, users must move funds from L1 to L2 to do so, a process known as “bridging.”
Currently, Arbitrum uses a bridged version of USDC from Ethereum, which will be renamed to “USDC.e.” This token acts as a receipt that users can redeem back on Ethereum for “real” USDC.
The goal of this initiative is to speed up transactions through the use of cross-chain transfer protocols (CCTPs). CCTPs handle the transfer of assets between blockchains, allowing users to unify liquidity. They support crypto and Web3 assets across portfolios.
According to the Arbitrum team, this will enable USDC to move natively to and from Ethereum (and other supported chains) in minutes, eliminating withdrawal delays.
The changes to USDC come at a time when the market for stablecoins, such as USDC, has trended negatively for most companies in the space over the past year. USDC and its parent company, Circle, have faced challenges, including the Silicon Valley Bank collapse, which caused the stablecoin to lose its peg and Circle to announce a $3.3 billion exposure to the failing institution.
USDC’s market capitalization has also decreased significantly over the past year, falling from $54 billion to $28 billion. Stablecoins are pegged to the US dollar and are meant to hold their price, so their market cap tends to be closely correlated with their circulating supply.
Arbitrum is currently ranked #38 on Coingecko, with its native token ARB trading at $1.16, representing a 0.6% increase on the day.