USD Coin (USDC) is an ERC-20 token that mainly runs on the Ethereum network.
It can also be found on other blockchains compatible with the ERC-20 token standard, including Algorand, Solana, Tron, and Stellar.
USDC is a stablecoin, which means it is designed to maintain a value peg to other assets.
This solves many of the problems of volatility that other crypto assets may bring when being used as a store of value or for everyday transactions, or as a safe haven during periods of market volatility.
In USDC’s case, one USDC token is pegged to one U.S. dollar, and every USDC token in circulation is backed by financial assets (mainly cash and bonds) held by the founding group, the Centre consortium, and other issuing institutions.
Since it is an Ethereum token, you can store it in an Ethereum-compatible wallet like Coinbase Wallet or MetaMask. Its design enables stable monetary value to move globally from a crypto wallet to other exchanges, businesses, and people without an intermediary.
Unlike regular US dollars, USDC does not require a bank account to be opened in particular geographic locations. Because of that, it allows unbanked and under-banked folks in any country to hold a dollar-backed asset even just through a mobile phone!
How does USD Coin work?
Turning U.S. dollars into USDC is a process called tokenization which has three steps:
- The user sends USD to the token issuer’s bank account.
- The issuer uses a USDC smart contract to create an equivalent amount of USDC.
- The newly-minted USDC tokens are delivered to the user while the U.S. dollars are held in reserve.
Redeeming USDC for U.S. dollars is just as easy as the tokenization process but in reverse order.
USDC has the benefits of both being a stable store of value and being programmable. The latter opens up a world of possibilities for applications and businesses.
For one, USDC transfers and payments can be made anywhere in the world at extremely low costs and in just a few minutes. Lending is made faster, cheaper, and more transparent.
On a larger scale, it makes payroll services, global crowdfunding, and donations to charity more stable and efficient.
Team Background
USDC was created by CENTRE, which is an open-source technology project powered by contributions from Coinbase and Circle.
Founded in 2012, Coinbase is a trading platform registered in the United States with a legal digital currency trading license, which has KYC and AML standards for its clients.
Coinbase participated in the project because it is in line with its mission to build an open financial system for the world.
Circle was founded in 2013 by entrepreneurs Jeremy Allaire and Sean Neville. It is an official Money Transmitter, which is a US money service business complying with federal laws and regulations.
Stablecoins governed by CENTRE are issued by regulated and licensed financial institutions that maintain full reserves of the equivalent fiat currency, such as U.S. dollars for USDC. These reserves are published in a monthly public attestation on CENTRE.io
Token Metrics:
- Holder addresses: 1,524,008 in Oct. 2022
- Transfers: 50,666,865
- Max total supply: 40B USDC (variable over time based on demand)
Notable projects within the ecosystem:
- Since its announcement in May 2018, the project has expanded to 60 partners
- Partnership with major credit card provider Visa in 2021