Circle launches Cross-Chain Transfer Protocol (CCTP), which will make USDC a multi-chain digital dollar

Original title: "Understanding Circle's Cross-chain Transmission Protocol CCTP"

Original author: Chain Researcher @purplepil l3 m

Original compilation: Odaily Planet Daily< /blockquote>

On April 26th, Circle, the issuer of the USD stablecoin USDC , announced the launch of Ethereum and Avalanche  USDC Cross-chain Transfer Protocol (CCTP), which can destroy the tokens on the original chain and mint new tokens on the target chain when the user crosses the chain. Circle  stated that many cross-chain projects including Celer, Hyperlane, LayerZero, LI.FI, MetaMask, and Wormhole will use this protocol in the future.

So, what is the working principle of this cross-chain transmission protocol and what will be the impact on the encryption market?

CCTP (Cross-Chain Transfer Protocol) is a permission-free on-chain tool from Circle that facilitates the transfer of USDC between different blockchains. Circle does not need liquidity on the target chain, but burns USDC on the source chain and mints native USDC on the target chain, and then enables USDC to flow locally across blockchains, making the liquidity in Web3 more unified and simplifying users experience.

How does CCTP work?

First, the user needs to initiate a USDC transfer through any integrated portal on the source chain, and specify the receiving wallet address on the target chain, portal/wallet/bridge (dApp ) destroy USDC on the source chain, and then Circle will prove the destruction event on the source chain.

Next, the dApp will send a proof of request to Circle, which will authorize it to mint burned USDC on the target chain.

Finally, the dApp uses the proof to mint USDC on the target chain and sends it to the recipient. As of April 27th, Metamask, 5 bridges, and 10 different partner SDKs such as Layer Zero and Wormhole have integrated with CCTP.

Who is CCTP designed for?

CCTP acts as a permissionless infrastructure for developers to build on top of or integrate into their existing applications, wallets and bridges programs, wallets and cross-chain bridges.

Do I need to register with Circle to use CCTP?

No, CCTP is a license-free on-chain utility for third-party developers.

When will CCTP be available on other blockchains?

CCTP is now available on Ethereum and Avalanche mainnets. Expansion to more chains is expected this year. Developers can visit Circle's developer documentation to get started building on CCTP.

Can users use Circle Account or Core API to move USDC across chains? Can centralized exchanges work?

Circle Account and Core API are able to move USDC across chains natively, but these commercial products are only available to qualified businesses approved by Circle.

Centralized exchanges usually hold various native forms of USDC liquidity on their platforms, and users who have accounts on centralized exchanges can transfer USDC ( native of a given chain) into their exchange wallet, then withdraw USDC (native of a different chain) to their external wallet.

In contrast, CCTP is permission-free, which means that any third-party developer can access it to integrate into their applications, and Account registration is not required. Users can move USDC to any supported blockchain at any time through a CCTP-enabled app. Developers can also build new on-chain experiences based on CCTP in their applications.

How is CCTP different from cross-chain liquidity pool solutions?

CCTP does not require centralized USDC liquidity to perform cross-chain transfers, which improves capital efficiency and avoids fees charged by liquidity providers.

How can a given amount of USDC destroyed on the source chain be successfully minted on the target chain?

All destruction of USDC will send an event transaction on the source chain, which will be automatically observed by Circle's proof service, and the application that initiates USDC destruction is responsible Get the signature proof from Circle, then enable CCTP to mint USDC on the target chain.

Has the CCTP smart contract passed the security audit?

The Circle CCTP smart contract has passed third-party audits performed by ChainSecurity and Halborn.

What if Circle's attestation service is not responding?

While the unavailability of Circle's attestation service will temporarily prevent new burn messages from being signed, uptime and availability are expected to be similar to how existing minting services operate .

When a user sends USDC via CCTP, can Circle access or store any personally identifiable information (PII)?

No.

How does CCTP affect the existing USDC cross-chain bridging service?

CCTP has no direct impact on the existing USDC bridge version.

How will CCTP influence Circle to launch USDC on more blockchains?

Circle's plan to introduce USDC natively to more blockchain networks remains unchanged and will continue to grow, CCTP will drive USDC to become a universal liquidity layer for Web3 , eventually making it accessible to all.

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