Circle launches cross-chain transfer protocol CCTP! USDC will be burned before crossing chains, then minted on the target chain.

Recognizing the security risks and liquidity fragmentation inherent in traditional cross-chain methods, Circle, the issuer of USDC on 8 different blockchains, has announced the launch of the cross-chain transfer protocol CTTP. This unique cross-chain approach not only enhances interoperability but also enables developers to build more open and versatile applications around USDC that support multiple blockchains.

Introduction to Circle's Cross-Chain Transfer Protocol (CCTP)

According to Circle's announcement, by the end of 2021, USDC has been natively deployed on 8 different blockchains, including:

• Ethereum
• Solana
• Avalanche
• TRON
• Algorand
• Stellar
• Flow
• Hedera

With the development of third-generation blockchains and Ethereum scaling solutions, the demand for cross-chain functionality of USDC has been increasing among developers and applications. However, Circle points out that the traditional "lock and mint" cross-chain approach would lead to a surge in synthetic USDC, resulting in excessive liquidity dispersion and security risks associated with this method of cross-chain transfer.

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To address this issue, Circle has introduced the Cross-Chain Transfer Protocol (CCTP). Since USDC is a chain-backed collateral asset, CCTP provides USDC with unique capabilities for cross-chain transfers compared to other assets.

In simple terms, when there is a need for USDC to be transferred across chains, the USDC will be destroyed on the original chain and re-minted 1:1 on the target chain. This allows for the secure transfer of USDC across different chains while keeping the dollar reserve unchanged.

CCTP is an open protocol designed for developers and does not require permission for usage, enabling technical personnel to seamlessly develop applications that support different native versions of USDC and serve users on various blockchains. Additionally, many infrastructure providers have already integrated their products with CCTP, including the LayerZero full-chain protocol, blockchain wallet MetaMask, cross-chain protocols Multichain, and Wormhole, among others.