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Base Network Gears Up For USDC Integration, Circle CEO Jeremy Allaire Confirms

Circle’s CEO Jeremy Allaire has announced that USDC will be launched natively on the Base Network platform next week. Allaire took to social media platform X (formerly known as Twitter) to share this news, emphasizing the benefits and implications of this integration.

Circle also confirmed the announcement, stating that USDC issued by Circle will be considered the official form of USDC for the Base Network ecosystem. 

They further highlighted that native USDC will gradually replace the currently circulating bridged USDbC liquidity that originates from Ethereum.

Base Network’s Native USDC Integration To Attract Capital?

The integration of native USDC on Base Network offers numerous advantages for users and developers alike. Key among these benefits is the expansion of liquidity, as native USDC gains traction within the ecosystem. 

An important aspect of the integration is the potential replacement of bridged USDbC (USD Coin on Ethereum) liquidity. Base Network aims to establish a “self-sustaining” ecosystem, where transactions and value transfers occur natively within the network. 

Per the announcement, by reducing reliance on external bridges, the integration of native USDC enhances efficiency, security, and scalability, resulting in a more streamlined and user-friendly experience.

Notably, the migration process from bridged USDbC to native USDC will be managed by Base Network in collaboration with ecosystem apps to ensure a seamless transition of liquidity. 

In addition to the expected boost to the network’s financial infrastructure, the integration of native USDC aims to create new opportunities for developers to leverage stablecoin functionality within their decentralized applications (dApps). 

This integration is also expected to simplify the integration of fiat currency and cryptocurrency for institutional investors, further broadening the appeal and utility of Coinbase’s Base.

Importantly, the integration of native USDC will not immediately impact Base Bridge, which will continue to operate “normally”, ensuring uninterrupted functionality for users, according to the announcement made on Monday.

Overall, The impending integration of the stablecoin on the Base Network marks an important development for the decentralized ecosystem. The introduction of USDC brings potential benefits such as enhanced liquidity, streamlined value transfer, and increased opportunities for developers. 

While the transition from bridged USDbC to native USDC may present challenges, Base Network is committed to managing the migration process effectively and addressing any concerns. 

As the launch of native Circle USD on Base Network approaches, industry participants eagerly anticipate its potential impact on liquidity dynamics and the broader cryptocurrency landscape. 

While the integration holds promise, it remains to be seen how successful it will be in attracting users within the Base Network ecosystem.

USDC

Featured image from iStock, chart from TradingView.com 

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Circle Strategic Defense: $1 Billion War Chest Shields Against Shrinking Market Share

According to a Bloomberg report, Circle, a prominent player in the stablecoin market, strategically leverages its substantial cash reserves of over $1 billion to weather fresh competition from non-crypto giants like PayPal. 

The company’s market share of the second-largest stablecoin, USD Coin (USDC), has been declining, mainly due to factors such as Binance’s decision to reduce its usage of USDC. 

However, per the report, Circle remains optimistic about the future of stablecoins and aims to stem the decline while exploring new revenue streams and global expansion.

Circle Relies On $1 Billion Cash Cushion

The circulation of Circle’s USDC has witnessed a significant drop from $45 billion to approximately $26 billion this year, while Tether, the leading stablecoin, has experienced growth during the same period. 

Circle attributes part of this decline to Binance’s reduced utilization of USDC to promote its native token. Increasing competition from non-crypto companies like PayPal further intensifies the challenges for Circle.

The company’s over $1 billion cash cushion provides a significant hedge against market headwinds. The company generates revenue primarily from interest income on assets backing the USDC, including dollar deposits and short-term Treasuries. 

According to Bloomberg, Circle’s strong financial performance is “evident,” with revenues exceeding $779 million in the year’s first half. 

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $219 million in the same period, exceeding the 2022 full-year figure of $150 million.

Circle’s CEO Remains Bullish On Stablecoins

 While acknowledging the impact of “tail-risk events” on USDC adoption, Circle’s CEO, Jeremy Allaire, remains optimistic about stablecoins’ mainstream potential. Allaire believes that increasing competition, such as PayPal’s recent entry into the market, will drive more financial services and internet payment firms to embrace stablecoins. 

Circle is actively pursuing partnerships to promote the broader adoption of USDC and plans to enhance transparency by regularly sharing financial reports. Moreover, the company has engaged Deloitte as its auditor.

Allaire anticipates that stablecoin issuers will face greater scrutiny and regulatory standards in the coming years. With regulators tightening control over stablecoins globally, he predicts that entities unable to meet these standards will be crowded out of the mainstream market. 

Nevertheless, Circle remains confident in its ability to adapt and benefit from the evolving regulatory environment. Despite potential interest rate declines, Circle expects increased crypto activity, positioning the company for further growth.

Circle is leveraging its substantial cash reserves to navigate market challenges and competition from non-crypto players. Despite declining market share, Circle remains focused on expanding revenue streams, promoting wider adoption of USDC, and embracing transparent financial reporting. 

With the regulatory landscape evolving, Circle aims to meet the highest standards and thrive in the stablecoin market, positioning itself for long-term success.

Circle

Conversely, USDC currently boasts a market capitalization of approximately $26.17 billion, securing its place as the sixth-largest cryptocurrency by market cap, according to CoinMarketCap data. 

This figure represents a minute 0.37% of the total cryptocurrency market, indicating the stablecoin’s steady performance despite the highly dynamic nature of the crypto space. With a circulating supply of 26.17 billion USDC tokens, the stablecoin has established a robust presence in the market.

Furthermore, USDC’s trading volume has surged, reaching an impressive $3.03 billion in the past 24 hours. This substantial trading activity positions USDC as the fourth most actively traded cryptocurrency, evidencing its liquidity and attractiveness to market participants. 

The 24-hour trading volume to market cap ratio stands at 11.59%, reflecting the strong liquidity and market depth of USDC, which further contributes to its stability and utility.

Featured image from Unsplash, chart from TradingView.com

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Circle, The Company Behind The USDC Stablecoin, Announces Euro Coin

Does the world need Euro Coin? There are already stablecoins pegged to the Euro in the market. The difference here, however, is Circle. As the issuer of the well-regarded USDC, they have the reputation, the know-how, and the clientele to make this happen. Even with all of those advantages, it’s the market that will decide if the world needs Euro Coin.

Related Reading | Crypto Investors Find Safety In Stablecoins, Bitcoin, Ditch Altcoins En Masse

On the project’s page, they describe it as, “Euro Coin (EUROC) is issued by Circle under the same full-reserve model as USD Coin (USDC), a trusted dollar digital currency with more than $54 billion in circulation.” At first, Euro Coin will exist on the Ethereum blockchain, it’ll be a traditional ERC-20 already compatible with everything out there.

1/ CIRCLE LAUNCHES EURO COIN: Today, we announced our 2nd major fiat-backed stablecoin, Euro Coin, which went live on Ethereum mainnet, and will be available to mint and redeem on June 30th. https://t.co/vPZkItL0Fu

— Jeremy Allaire (@jerallaire) June 16, 2022

The Euro Coin will be “100% backed by euros held in euro-denominated banking accounts so that it’s always redeemable 1:1 for euros”. The difference with regular euros is that EUROC will be “available 24/7 and moves at internet speed”. The new stablecoin debuts on June 30th. “Businesses can mint Euro Coin straight from the source by depositing euros into their Circle Account using Silvergate’s Euro SEN network.”

What’s Euro Coin ’s Main Use?

In a recent tweet, Circle CEO Jeremy Allaire summarized the product’s value proposition. “Like USDC, Euro Coin is being issued under a regulated framework for money transmission, under the same statutes that regulate USDC, with full-reserves in Euro, with the same security, liquidity and transparency that the market has come to expect from Circle”. Does it solve a problem, though? Two words: foreign exchange.

4/ Euro Coin expands opportunities for payments, on-chain FX, trade finance, commerce and broader digital asset markets use-cases. The launch is symbolic of a shift in crypto markets towards greater and greater utility value from blockchain infrastructure.

— Jeremy Allaire (@jerallaire) June 16, 2022

Back to the project’s page, Circle promises “multi-currency digital banking and near-instant foreign exchange, where daily volume in traditional markets can top $6.6 trillion globally.” As we read a while ago in the Bitcoinist Book Club, “The Bitcoin Standard” explains how that huge market emerges just to solve “the age-old problem of lack of coincidence of wants.” As explained by Saifedean Ammous, the process goes like this:

“The seller does not want the currency held by the buyer, and so the buyer must purchase another currency first, and incur conversion costs. As advances in transportation and telecommunications continue to increase global economic integration, the cost of these inefficiencies just keeps getting bigger. The market for foreign exchange, at $5 trillion of daily volume, exists purely as a result of this inefficiency of the absence of a single global homogeneous international currency.”

As Circle’s numbers show, since the book’s publication the foreign exchange market kept growing. And since we’re far from living in a bitcoin standard, with a “single global homogeneous international currency,” the foreign exchange will keep growing. And that’s where Euro Coin comes in. 

ETH price chart for 06/16/2022 on Kraken | Source: ETH/USD on TradingView.com
The New Stablecoin’s Characteristics

  • Where will the money that backs the operation be? “Circle will hold euros in euro-denominated banking accounts at leading financial institutions, beginning with Silvergate Bank in the U.S.”

Related Reading | Crypto Company Circle Seeks To Become Global Digital Currency Bank

  • “Businesses can use a free Circle Account to mint and redeem Euro Coin at no additional cost”. Circle can afford to treat businesses like that because they’re that big and established. 
  • Circle will audit the Euro Coin. “Grant Thornton LLP will be issuing monthly attestations of Euro Coin reserves, starting with an attestation for the month of July 2022. Circle will publish the attestation reports on this webpage, with July’s report being available to view online by the end of August 2022.”

It’s also worth noting that the main criticism the project received was because they choose Ethereum to start with. However, Circle promises the Euro Coin in other blockchains soon. And considering that USDC exists in every smart contract-enabled blockchain under the sun, there’s no reason not to believe them.

Featured Image: Screenshot from Circle’s website | Charts by TradingView