Market Statistics
Market Statistics can be found here.
About USD Coin (USDC)
Introduced in September 2018, USD Coin, abbreviated as USDC, is a stablecoin fully backed by liquid cash and assets equivalent to cash. USDC can be exchanged on a one-to-one basis for U.S. dollars, with its value supported by assets held by regulated U.S. financial institutions like BlackRock and BNY Mellon. Regular monthly confirmations of USDC reserves are published to ensure that the reserves exceed the circulating USDC amount, following attestation guidelines established by the American Institute of Certified Public Accountants (AICPA).
In February 2024, Circle decided to cease its support for USDC on the TRON blockchain as a part of its ongoing risk management strategy to maintain USDC's reputation as a trusted, transparent, and secure digital dollar
Resources
Website: https://www.circle.com/en/
Whitepaper: https://f.hubspotusercontent30.net/hubfs/9304636/PDF/centre-whitepaper.pdf
Who are the founders of USD Coin (USDC)?
USDC was developed by the CENTRE consortium, which is a collaboration between Circle and Coinbase. The goal of CENTRE was to create stable cryptoassets and network protocols. The project originated from the realisation that the industry required a stablecoin backed by fiat currency, characterised by robust governance and transparency, in contrast to Tether. USDC tackled these concerns by regularly publishing a public confirmation of 100% reserves of fiat tokens, and establishing clear regulations and instructions for CENTRE members concerning the issuance and redemption of USDC. Additionally, to become an issuer within the CENTRE consortium, members are required to adhere to essential membership and operational regulations, including licensing, compliance, technology, operations, accounting, and custody of fiat reserves.
In August 2023, Circle and Coinbase mutually decided that due to increasing regulatory clarity for stablecoins both in the U.S. and globally, the need for a separate governing entity like Centre is no longer necessary. Centre will cease to exist as an independent organisation, and Circle will continue to serve as the issuer of USDC, absorbing all Centre-related governance and operational responsibilities. This updated structure will streamline operations and governance, while reinforcing Circle's direct accountability as the issuer. This includes retaining all smart contract keys, adhering to regulations regarding reserve governance, and facilitating the expansion of USDC to new blockchain networks.
How does USD Coin (USDC) work?
Businesses offering USDC have the option to create a Circle Account to convert US dollars into USDC. When a business deposits USD into its Circle Account, Circle generates an equivalent amount of USDC for them. This creation of new USDC is referred to as "minting," which increases the total supply of USDC. Similarly, if a business wishes to convert their USDC back into US dollars, they can deposit the USDC into their Circle Account and request the corresponding amount of US dollars. This process, called "burning," removes USDC from circulation by converting it to traditional currency.
USDC can also be accessed quickly from crytoasset exchanges like Coinbase, Crypto.com, and Binance.us. When you buy USDC on a crytoasset exchange, the exchange typically uses its available USDC balance to fulfill the transaction. If more USDC is needed, the exchange might mint additional USDC by utilizing its Circle Account.
Just like its predecessors, USDC addresses two main challenges faced by existing cryptoassets: extreme price volatility and the ability to convert between fiat currencies and cryptoassets. USDC offers stable value within transactions and smart contracts. It enables cost-effective, instant global transfers and has various applications, such as rewards, lending, payments, crowdfunding, and transparent donations.
How is the network secured?
USD Coin (USDC) does not have its own blockchain — instead, it is built on various blockchains including Algorand, Arbitrum, Avalanche, Ethereum, Flow, Hedera, Solana, Stellar and Tron and is secured by their respective consensus protocols.
In addition, USDC has also been bridged to Polygon, Fantom, NEAR, the Cosmos ecosystem, and many more emerging blockchains.
Storage
Just like other cryptoassets, it's crucial to understand the ways to securely store your USD Coin (USDC). Broadly speaking, there are two main types of crypto wallets for safeguarding your cryptoassets: hot wallets and cold wallets.
Hot Wallet
A hot wallet is a digital wallet connected to the internet. While this convenience suits quick transactions with your USDC, it heightens exposure to hacking and theft risks. Hot wallets can appear as mobile apps, desktop programs, or online services.
Cold Wallet
In contrast, a cold wallet is rarely linked to the internet. This makes cold wallets more secure than hot ones, though less user-friendly. Cold wallets are typically hardware wallet devices.
Risks
Underlying reserves
USDC's value is backed by USD-denominated assets held by regulated financial institutions. If these institutions face financial difficulties or mismanagement, it could impact the stability of USDC and the ability to redeem it for USD.
Regulatory environment
Stablecoins like USDC are subject to regulatory scrutiny, and changes in regulations could impact their operation, value, and use. Regulatory changes may require the stablecoin issuer to modify its practices or even halt operations.
Market sentiment
While USDC is designed to maintain price stability, there could still be price fluctuations, especially if the underlying reserves are not as stable as expected or if market sentiment changes.
Technology or security risks
USDC operates on several blockchains, which can be subject to technical vulnerabilities and attacks. Smart contract bugs or blockchain vulnerabilities could lead to loss of funds or instability in the stablecoin.
Competition
USDC faces competition from other stablecoins and digital currencies. Shifts in popularity or adoption of alternative stablecoins could impact the demand for USDC.
Dependence on Coinbase
As Coinbase is one of the founding entities behind USDC, any regulatory actions or issues affecting Coinbase could indirectly impact USDC.
Liquidity Risk
Although USDC aims to maintain a 1:1 peg with USD, market demand and liquidity can affect the ability to exchange USDC for USD at the expected value, especially during times of market stress.
The due diligence summary is not intended to be a substitute for any legal, tax or financial advice and you should obtain your own independent legal, tax, financial or other advice before deciding whether the purchase and/or sale of the cryptoasset is suitable to your unique circumstances.
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