Coinbase and Circle Centre Consortium have expanded USDC from Ethereum to Algorand’s blockchain as part of its multi-chain USDC framework—to bring scalability and performance improvements to the digital dollar stablecoin for global consumer payment adoption.
The Algorand Foundation, which is purportedly already a pure POS blockchain has been gearing up to take its place in the Decentralized Finance (DeFi) ecosystem.
Implementation of the stablecoin on the Algorand blockchain
The Coinbase and Circle Centre Consortium which oversees the governance of the US Dollar Coin (USDC) has released a mainnet implementation of the stablecoin on the Algorand blockchain. The additional support of Algorand is to ensure USDC has the flexibility to support everything from emerging DeFi projects to large-scale financial institutions as an official chain of its USDC digital dollar stablecoin.
The USDC is the second-largest digital dollar stablecoin by volume and was originally supported by only the Ethereum blockchain, which as of late has been displaying some issues trying to support the DeFi ecosystem.
The Centre Consortium said in an announcement, “As evidenced by the recent and very rapid growth and usage of stable coins on public chains like Ethereum, there is a tremendous need for blockchain infrastructure that can scale to support significantly higher transaction throughput and lower fees on public Layer 1 blockchain infrastructure.”
This expansion of support for USDC on new blockchains from being purely Ethereun based—comes as USDC has rapidly grown to over 1.8 billion in circulation, experiencing more than 3x growth in the past six months and, according to the Centre Consortium, becoming the world’s leading compliant and regulated digital dollar stablecoin.
The fastest growing regulated stablecoin.
Circle boasts on its website it is the best platform to run an internet business, using new standards for money powered by USDC— the fastest growing regulated stablecoin. Central bank digital currency (CBDC) across global economies appear to be an eventuality, as central banks across the world have been responding to the evolution of new technologies by issuing their own pilot tests of CBDC.
The onboarding of CBDCs seems to “inevitable”, with digital payments being revolutionized by the current pandemic. It will render central banks more competitive in the digital age, as CBDC is a new technology that will deliver “programmable money, reduce friction between payments, and make modern economy more significant,” according to Lubin.
Adding to Lubin’s sentiments on the digital yuan, Jeremy Allaire, the CEO and founder of the digital currency company Circle, said that “digital payments were far more evolved in China than anywhere else in the world”, as the country has long leveraged WeChat Pay and AliPay for transactions.
Researchers had pointed out to me that the ‘Multi-Chain’ framework had been in motion by the Centre consortium for several months. This was important in the timeline of events leading up to the implementation of Algorand, as the Ethereum network has been slower – as well as more expensive – as a result of the new phenomenon described as ‘Decentralized Finance’, or (DeFi).
Researchers expanded on the idea of the Multi-Chain framework, stating, “To support a broad range of use cases, developers and ecosystems, we aim to allow its fiat-denominated digital currency standards to be used across multiple blockchains. By enabling stable coins built on Centre’s protocols to be available on multiple blockchain ecosystems while still providing underlying interoperability, Centre enables wider adoption and usage of digital dollars built around USDC”.
The Algorand blockchain versus Ethereum
In a recent interview, Keli Callaghan, Head of Marketing at Algorand was asked about the difference of transacting with the Algorand blockchain versus Ethereum. She said bluntly, “Your transactions will be much faster.”
According to the Centre whitepaper, a stablecoin is defined as ‘A term used to describe a crypto asset that is pegged to underlying reserved assets and/or managed by software algorithms to enforce price stability’. The increase of the USDC crypto asset has gone from $518 million at the beginning of the year to almost $1.85 billion as of September 10, according to a chart from Coinmetrics.io.
Algorand recently announced comprehensive smart contract capabilities that will purportedly enable DeFI developers to create Defi solutions and Dapps that “can scale to billions of users” while benefiting from the security of its base layer Algorand protocol.
Meanwhile, Ethereum continues to face issues with scalability and gas fees as it appears the network’s existing infrastructure simply cannot keep up with levels of demand of DeFi. Ethereum advocates are concerned that any further delays to the launch of ETH 2.0 could cause more DeFi protocols and users to consider other blockchain platforms.
There have been issues with the recent launch of ETH 2.0 testnet Medalla and concerns from developers that more delays could be expected. Vitalik Buterin also recently admitted that ETH 2.0, the transition of Ethereum from PoW to pure PoS—is much more complex than he originally thought.