The last few weeks have seen the failure of LUNA/UST, raising questions about how stablecoins operate and how USDC is different. Here, we address common concerns and misconceptions from developers about USDC.
Q: Is USDC a good stablecoin to build on?
I believe USDC is a great stablecoin for developers. Here are some data points:
- USDC was launched in September 2018 and currently¹ has more than $53B in circulation. During this time, 1 USDC has always been redeemable for $1 from Circle. In the public markets, USDC’s market price has had a standard deviation of under $0.003 in the last 2+ years, which is the smallest for dollar-backed stablecoins.
- To date, market participants have redeemed over $119B USDC with Circle. In 2021 alone, $61.1B USDC was redeemed with Circle. Last week², $5.6B billion USDC was redeemed.
- USDC has the best software infrastructure for its core primitives. Circle has integrated deeply with banking partners and systems and has built the most automated stablecoin issuance and redemption flows. When dollars hit Circle, USDC is minted within minutes of fiat settlement. Circle users can mint and redeem USDC 24 hours a day/7 days a week, around the world, no matter how big the mint or redemption. In the month of April, we minted an average of $393M/day and redeemed an average of $464M/day. Because of the high level of automation and just-in-time nature of the process, we can scale to meet as much as our customers need.
- Circle has a developer-friendly suite of APIs that let developers embed USDC minting, redemption, and custody directly into their products.
- The USDC reserve is held in cash and short-dated U.S. government obligations, consisting of U.S. Treasuries with maturities of 3 months or less, which are among the safest and most liquid assets in the world.
- USDC is supported natively on 8 public blockchains, and we plan on adding more in short order. We believe in a multichain future, and we are going to follow developer interest as we prioritize what chains to support.
- In the month of April, an average of $10.4B USDC was transacted daily on public chains and billions more in the form of trades in centralized exchanges.
Q: If I use USDC in my protocol/application, can my protocol/application be blocked?
USDC is designed with a high standard for trust, transparency and accountability. Circle and the Centre Consortium only block addresses when we are legally required. This includes court-ordered interventions as well as sanctions compliance following U.S. and international rules. These rules are also designed to protect privacy, and promote competition and interoperability. We take this responsibility very seriously and can share the following data: Of the total $53B+ USDC in circulation, only $2.7M USDC is currently blocked. A total of 38 unique addresses have ever been blocked to date, all of which comply with OFAC sanctions and court orders.
Importantly, the blocking of addresses emits events on-chain, and we encourage the community to monitor those events. Blocking is never done unilaterally or arbitrarily and follows the highest duty of care.
Q: As a developer, how should I think about choosing USDC versus other options?
USDC is an on-chain dollar API platform that is global, liquid, and trusted. Adding USDC to your application or protocol is about more than allowing your end-users to utilize one more crypto asset. It is connecting your application or protocol to a rich, robust platform that allows your product to interoperate in a permissionless way with thousands of innovative payments, commerce, capital markets, gaming, and other applications. You can focus your efforts on building services for your users while relying on the USDC platform for money movement and market infrastructure primitives.
Circle has been issuing USDC for close to four years and is fully invested in making USDC the most trusted platform for developers to build their on-chain applications on.
Q: Does Circle monitor on-chain USDC transactions?
Circle maintains a compliance program consistent with its legal obligations, which includes controls such as (but not limited to) robust KYC, transaction monitoring, and sanctions screening. These are implemented on Circle’s business customers using Circle Account and Circle APIs. These practices ensure that the issuance and redemption of USDC into and out of the traditional financial ecosystem can be trusted.
Participants in the broader blockchain ecosystem may have their own regulatory compliance obligations (for example, retail wallets, exchanges, etc.) which would include controls similar to those mentioned above.
For details relating to the blocking of sanctioned wallet addresses, see Q: If I use USDC in my protocol/application, can my protocol/application be blocked?
Q: Are a lot of developers using USDC in their protocols/applications?
Developers have always been key to USDC’s leadership position. On launch, USDC already had functioning integration or commitment from over 30 teams.
Today, USDC is widely adopted by a broad set of developer teams.
From an infrastructure point of view, USDC is supported natively on 8 blockchains (Ethereum, Solana, TRON, Avalanche, Algorand, Stellar, Flow and Hedera). Bridged versions of USDC have been brought to 30+ other layer 1 / layer 2 ecosystems by bridge solution teams. There are over 200 digital wallet products integrating with USDC across several blockchain ecosystems.
In payments and fintech, USDC is broadly utilized as well. Dozens of crypto payments products utilize it either as a payment or settlement instrument. In traditional finance, USDC has early adoption by major brands such as Stripe, Visa, Mastercard, MoneyGram, to name a few.
In the crypto capital markets space, USDC is integrated into over 180 exchange platforms (centralized and decentralized), as well as dozens of lending, yield and derivatives products.
There are several other categories of developer teams integrating with USDC that aren’t properly accounted for. We will be launching a USDC ecosystem catalog soon that will allow participants to crowdsource that information.
Q: Do I need to become a Circle customer to use USDC in my application?
No, you don't. You only need a Circle Account to mint or redeem USDC and if you are interested in using the paid versions of Circle’s APIs. USDC is otherwise permissionless, and you are free to integrate with it, compose it or even fork its code.
Q: Who issues USDC?
Circle is the issuer of USDC and is regulated under U.S. state money transmission supervision laws. As a developer- and ecosystem-first innovation, USDC is also designed to advance the broader blockchain and Web3 ecosystem.
Q: Can I earn yield on USDC that I hold in my reserves?
There are many DeFi lending protocols across several blockchains where you can earn yield on USDC deposits. Aave, Compound, Mango Markets, Apricot Finance, Solend, Maple Finance, Goldfinch Finance are among the options for earning yield on your USDC. Circle Yield* offers institutional accredited investors the ability to generate enhanced fixed-term yield on their USDC holdings by investing in Centralized Finance (“CeFi”) blockchain-based lending markets. As of November 17, 2022, Circle Yield is not accepting new loans. We are evaluating future updates to the program.
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¹As of May 26, 2022
²From May 15 to May 21, 2022. These weekly figures were calculated by Circle Internet Financial, LLC and have not been verified by any independent third party auditor (Including Grant Thornton). A Circle customer can always mint or redeem USDC in 1:1 exchange for U.S. Dollars through their Circle Account; customers are able to mint and redeem nearly instantly subject to settlement of funds
* Offering subject to business approval, geographical availability, and regulatory authorization, and there is no guarantee that the product will become available in a specific timeframe or to a specific customer or geography. Circle Yield product offered through Circle International Bermuda Limited (“Circle Bermuda”). Circle Bermuda has entered into lending arrangements with one or more institutional borrowers, including Genesis Global Capital, LLC. These borrowers pledge and transfer Bitcoin into custody with a third party custodian as collateral for their USDC borrowings and Circle Yield investors benefit from a security interest in Circle Bermuda’s security interest in the pledged Bitcoin.
Circle Account and money transmission services are provided by Circle Internet Financial, LLC. Circle Internet Financial, LLC, NMLS # 1201441, is a licensed provider of money transmission services. Circle Bermuda is licensed by the Bermuda Monetary Authority and holds a Bermuda Digital Asset Business (DAB) License, No. 54786. A full list of Circle’s licenses can be found at https://www.circle.com/en/legal/licenses.
Circle is not a bank; your Circle Account is not a bank account, and any funds are not insured or protected by government compensation and/or regulatory protection schemes by the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or by any US or foreign government agency, insurance fund, person or entity. For investors in the United States, investments described in this communication are offered by Circle Bermuda to “accredited investors” only in accordance with Regulation D, Rule 506(c) of the Securities Act of 1933, as amended. Neither the SEC nor any other regulatory body has approved or disapproved Circle Yield. While Circle Bermuda is regulated by the Bermuda Monetary Authority for digital asset business, Circle Bermuda is not engaged in banking and deposit taking activities and is not regulated for these purposes. You should carefully conduct your own investigations and analyses in connection with any participation in this product, including its objectives, risk factors, fees and expenses and the information set forth in these materials. All prospective participants in the products described herein are advised to consult with their legal, accounting and tax advisers regarding any potential participation. Tax may be payable on any return on and/or any increase in the value of your investment and you should seek independent advice on your taxation position. Please read the offering documents carefully before you invest. Additional information is available upon request.
Not currently available in the following U.S. states: Alaska, New York and Hawaii.
**Rates are purely indicative and are subject to change pending availability, approval and market conditions.
***Learn more about Genesis Global Capital, LLC here.