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USD Coin (USDC)

Price
$1.02
0.00008789 BTC Buy
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Overview

USD Coin (USDC) is fiat-collateralized stablecoin that offers the advantages of transacting with blockchain-based assets while mitigating price risk. Each USDC is issued as an ERC-20 token on the Ethereum blockchain and is 100% collateralized by a corresponding USD held in accounts subject to regular public reporting of reserves.

Background

Launched in October 2018, USD Coin (USDC) is a fiat-collateralized stablecoin by the CENTRE consortium, a partnership between Circle and Coinbase created to develop price-stable crypto assets and network protocols.

Similar to its predecessors, USDC exists to solve two major issues with existing cryptocurrencies: high volatility and convertibility between fiat currencies and cryptocurrencies. The project was launched out of the insight that the industry needed a fiat-collateralized stablecoin with strong governance and transparency, in contrast to Tether. USDC attempts to solve these issues by publishing a monthly public attestation of 100% reserves of fiat tokens on CENTRE.io, and providing clear rules and guidelines for CENTRE members regarding USDC issuance and redemption. Furthermore to become an issuer within the CENTRE consortium members must follow key membership and operating rules which include licensing, compliance, technology & operations, accounting, and custody of fiat reserves.

Exchanges have been the primary users of USDC as an alternative to fiat currencies, outsourcing the need to maintain banking relationships. Furthermore, USDC is one of the only fiat-collateralized stablecoins available for use in the burgeoning DeFi ecosystem.

Technology

USD Coin is the first implementation of CENTRE's fiat-back stablecoin network, launched as an ERC-20 compliant token on Ethereum. USDC relies on a proof-of-reserves system to ensure that reserve assets match circulating tokens.

CENTRE contracts manage the minting and the redemption/burning of stablecoins, which can be used for both the exchange and wallet interoperability use cases. Customers who on-board through a stablecoin on-ramp, such as a web application created and maintained by a licensed CENTRE token-issuing member, can transfer fiat funds into that CENTRE issuer’s account. The issuer then executes a series of commands with the CENTRE network to verify, mint, and validate fiat tokens pegged to the value of those deposited funds. The customer can then transfer those tokens elsewhere in order to use them. Redemption follows the reverse sequence: fiat tokens are burned when a customer visits an off-ramp such as a web application maintained by a licensed CENTRE issuing member. Upon successful verification and validation, funds from underlying fiat reserves would be transferred to the customer’s external bank.

Content provided by: Messari

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