Composable USDC: Seamless UX in the Multi-chain World

Composable USDC: Seamless UX in the Multi-chain World

USDC Ecosystem Spotlight

The blockchain ecosystem is multi-chain. Avalanche, Cosmos, Ethereum, Polygon and Sui are growing and cater to different developer demographics. Developers today understand how to build on any single chain, and have a suite of tools and learning materials at their disposal. However, navigating the multi-chain ecosystem today is complex, and requires a paradigm shift in how applications are architectured.

Axelar is a decentralized and permissionless cross-chain platform, offering secure cross-chain communication and cutting-edge developer tooling. Combining Axelar with the recently announced Cross-Chain Transfer Protocol (CCTP) by Circle, we plan to unlock seamless Web3 user experiences to make blockchain technology accessible to billions of users.

 

TL;DR
  • Circle has announced the Cross-Chain Transfer Protocol, enabling USDC to flow natively cross-chain - eliminating the need for wrapped versions on supported chains.
  • Axelar adds General Message Passing to Circle's protocol.
  • Together, Axelar and Circle plan to enable composable USDC: developers compose one-click, multichain experiences, incorporating native USDC and function calls to any dApp on any connected chain.

 

"The existing cross-chain landscape creates barriers to broad adoption of Web3."

Cross-chain UX is fragmented in ways that create inefficient user experiences and impose unnecessary costs and risks. To move between networks, users are required to (1) navigate to multiple frontends and bridge UIs, (2) submit several transactions and (3) connect to multiple wallets. From the user’s perspective, USDC held on Solana is different from USDC held on Ethereum or Avalanche. Bridging USDC today can be expensive and capital inefficient, as it requires some liquidity provider to facilitate a swap, charging a fee. Security concerns of existing bridging solutions can hinder adoption. The recent bridge hacks have created a perception that secure cross-chain communication is impossible.

What is the cost of this market segmentation? How does the opportunity horizon expand when developers have the tools to build applications that interact with native assets (not wrapped representations) on any chain, in just one click for the user?

 

Composable USDC: secure and seamless cross-chain UX

To empower developers to create seamless user experiences in a multichain world, Circle and Axelar have built powerful tools:

  • Cross-Chain Transfer Protocol: At Converge22, Circle announced plans to launch a permissionless protocol that uses the same cross-chain burning and minting process as a commercial Circle Account - enabling users to move USDC natively across chains.
  • Axelar’s General Message Passing (GMP): Most people are familiar with cross-chain bridges, which can only transport wrapped representations of assets. GMP goes beyond that: Axelar can transport any payload, allowing devs to build true cross-chain apps offering one-click user experience (UX).
  • Together, CCTP and GMP allow developers to pass payloads atomically with native cross-chain USDC transfers. This makes it possible to create cross-chain dApps that are totally seamless and universal, bringing USDC and users into every supported ecosystem. Users will be able to issue a single transaction with a GMP payload, and on the backend, the application takes care of the bridging and any other action that the user indicated in the payload.

Benefits

By composing Axelar GMP and Circle's CCTP, users get the following benefits:

  • Composable USDC can be used as a routing asset across chains, removing fragmentation. Users know they own USDC, and never have to think about which chain they hold the USDC on.
  • 1-click cross-chain transactions. Axelar relay and gas services allow users to perform cross-chain calls across applications with one click, paying gas only on the source chain.
  • Enhanced security: Axelar is a decentralized network that can attest that the USDC is correctly burnt on the source chain in addition to Circle’s CCTP before executing requests on the destination chain.
  • No slippage: USDC transfers happen natively without the need for liquidity pools. The user only pays gas fees.
  • Powerful developer tools and precise transaction monitoring: Axelar SDK can be used to trace the state of USDC cross-chain transactions, debug, and relay. All cross-chain activity is visible via axelarscan.io and the associated API.

Use cases

We describe three use cases that illustrate the power of this approach:

  • Seamless cross-chain swaps: A user will be able to perform seamless cross-chain swaps across assets that live on distinct chains [ETH for AVAX]. To execute such requests, ETH can be swapped for USDC which is routed and swapped for AVAX on the destination chain. Routing and execution on the destination chain is completely abstracted from the user, delivering a seamless 1-click experience. The LPs never assume any bridge risk, as they hold native ETH, USDC and AVAX on both chains. https://www.youtube.com/watch?v=RyQkEcM1nKE
  • One-click deposits: Open a position on a perpetuals exchange like dYdX, which lives on its own application specific chain, from anywhere. On a source chain — Avalanche, for example — the user issues a single transaction which sends USDC to the dYdX chain and opens a position on behalf of the user. To close their position, the user later issues another transaction from Avalanche, which on the backend gets routed to the dYdX chain. The user never has to switch wallets, or even know that dYdX is on a different chain. No slippage is incurred.
  • Cross-chain NFTs: A USDC holder on Solana wants to buy an NFT that is listed on OpenSea on Ethereum. The user issues a transaction from their Phantom wallet, the NFT is purchased on OpenSea on Ethereum, and delivered back to the user’s Phantom wallet on Solana. The user saved time and effort by not needing to interact with an Ethereum-compatible wallet (e.g. MetaMask) and can now use their NFT within Solana applications.

We are thrilled to partner with Circle, to secure Web3 and make it universally and easily accessible for the next millions of users.

Axelar’s General Message Passing is available today – let’s build


Circle’s Cross-Chain Transfer Protocol is expected to launch on Ethereum and Avalanche mainnet later this year. Testnet availability and documentation are coming soon. Join the conversation at discord.com/invite/buildoncircle

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