Noble has implemented CCTP, the cross-chain transfer protocol for Circle, on its mainnet. This will reportedly enable the native minting of USDC within the inter-blockchain communication protocol (IBC) of Cosmos.
CCTP employs a burn-and-mint mechanism, where USDC is taken out of circulation (burned) on the source chain and then recreated (minted) on the destination chain after being verified.
Accessibility is key
With the integration of CCTP, Circle aims to enhance the usability of USDC by facilitating seamless cross-chain transactions on Noble. This move is anticipated to positively impact the market capitalization of USDC, which has experienced a prolonged decline.
Noble, along with platforms like Arbitrum, Avalanche, Base, Ethereum, and Optimism, now supports the direct minting of USDC through CCTP, while the protocol is currently in the testing phase on Solana.
Users can therefore leverage CCTP to generate Noble USDC, which can be subsequently transferred to other Cosmos applications such as Osmosis or dYdX. The total supply of Noble USDC has also already surpassed $20 million, as reported by MintScan.
A wise approach
It is worth noting that this approach, emphasizing direct asset transfers, is different compared to token bridging, a method where assets are locked on one chain in exchange for equivalent wrapped tokens on another. The burn-and-mint method has gained preference over time, especially in light of security concerns associated with token bridging.
For users looking to withdraw USDC through Cosmos using CCTP, the process must go through Noble. Circle warns that attempting to transfer funds to a Circle account via any other IBC app may result in a loss of funds.
Lastly, as a centralized entity, Circle choosing to invest in a permissionless cross-chain protocol aligns with the broader trend of centralized crypto projects enhancing their decentralized finance (DeFi) offerings. Recent reports also suggest that Circle is contemplating an initial public offering in early 2024.