USDC, the stablecoin co-founded by Circle and Coinbase, first started as an Ethereum-based token. After adding support for the Algorand blockchain, Centre, the consortium that manages USDC, is announcing that Stellar will be the third blockchain that supports USDC. The rollout should happen at some point during Q1 2021.
USDC is a cryptocurrency that follows the value of USD. One USDC is always worth one USD — hence the name stablecoin. When new USDC are issued, USDC partners keep some USD aside on bank accounts.
Those accounts are regularly audited to prove that there are as many USDC in circulation as there are USD in those accounts. There are currently 2.8 billion USDC in circulation.
Stablecoins present some flexibility when it comes to storing value as you don’t need a bank account. But Ethereum-based stablecoins suffer from the same issues that Ethereum users are currently facing — slow transaction speed and high transaction fees.
By letting you choose to send USDC on the Stellar blockchain, transactions should be faster and cheaper. Basically, you’ll have to choose the channel that you use to send USDC — Ethereum, Stellar or Algorand. If you’re sending from one exchange to another, or from one wallet provider to another, you have to make sure that both support USDC on that specific blockchain.
Circle has also developed a multichain USDC swap API. Authorized developers can leverage this API for cross-chain swaps in case there are some liquidity issues for instance.
If enough developers adopt this swap API, it should improve the experience for the end user. You won’t have to pay as much attention to the blockchain you’re using to send and receive USDC.
So this is still a workin in progress. Some products could choose to focus on one blockchain in particular, others could let you choose between USDC on top of Ethereum, USDC on top of Algorand or USDC on top of Stellar. And others might use an abstraction layer so that you can transparently send USDC from an Ethereum wallet to a Stellar wallet. There will be some swapping happening behind the scene.
