Circle has launched a mainnet protocol that enables users to transfer its US Dollar Coin (USDC) between Ethereum and Avalanche. The Cross-Chain Transfer Protocol (CCTP) does not use a traditional bridge but instead destroys tokens sent to its contract and issues new ones on the receiving network. Users can redeem the new tokens for bank deposits by depositing them with Circle or its partners. Fragmentation of USDC tokens on various networks is expected to decline and Circle anticipates the protocol will improve liquidity and capital efficiency in DeFi. The largest cross-chain protocols have pledged to use CCTP, including Celer, Hyperlane, LayerZero, LI.FI, MetaMask and Wormhole.

(By TOM BLACKSTONE)