Centre Consortium members Circle and Coinbase today announced a major upgrade to the USD Coin (USDC) protocol and smart contract, making it significantly easier for people to use USDC in payments, commerce and peer-to-peer transactions. The update also adds additional security infrastructure to the USDC smart contract. These advancements come at a time when USDC, the fastest-growing regulated stablecoin, has seen unprecedented adoption, surpassing $1.4 billion in market capitalization and more than $90 billion in on-chain transaction volume.
Gasless Sends Improve User Experience
USDC transactions on the Ethereum network incur transaction costs called “gas fees.” Most digital wallets require users to purchase and hold a balance of ether (ETH) in order to pay these gas fees. This complexity presents a barrier to mainstream adoption and broad usage of digital dollar stablecoins for internet payments.
USDC 2.0 introduces “gasless sends,” which enables wallet and app developers to abstract away the complexity of gas fees (and the need for the customer to hold a balance of ether) and instead to delegate the payment of the gas fees to another address. This allows developers to either provide that service themselves, or allows a third party service to pay the related fees. In other words, developers can either pay the fees on behalf of the customer or present and deduct the fees in USDC.
With this innovation, digital wallet and app developers can build user experiences that more closely resemble the experience of existing mobile payment apps — customers will be able to send and receive USDC payments on a peer-to-peer basis solely using USDC, with fees expressed and paid in USDC. These simplified and improved user experience flows will accelerate the virality of making and receiving payments using USDC on the internet.
Improved Security and Administration
USDC and Centre operate with a core set of administrative tasks and functions that require the involvement of key technical, security and operational teams at issuers, and many of these tasks are handled through off-line manual processes. USDC 2.0 introduces a new set of on-chain multiple-signature contracts, including new consensus mechanisms, which will help to improve the resiliency and growth of Centre and shift off-line human processes into on-chain multiple signature processes. Administrative operations can be managed on-chain versus manual off-chain processes, which improves security, auditability and in turn resilience. By using an M-of-N multiple signature model, these improvements also anticipate growth in Centre with more members, including issuing members who would participate in operational flows using on-chain tasks.
USDC 2.0 Availability and Support
The new USDC smart contract and protocol improvements are available today, August 27th, and any wallet developer can begin to take advantage of gasless sends. Centre members Circle and Coinbase both intend to introduce support for these protocol improvements in their respective products and services, and any 3rd party developer can integrate and support this today using the public USDC smart contract.
The USDC 2.0 changes enabled today are completely backwards compatible and there is no impact or change to wallets, exchanges or applications currently integrating with USDC, nor is there any impact or change to existing holders of USDC.
To learn and hear more about these developments, tune in to the Money Movement live today at 1:00 PM ET, where product leadership from Circle and Coinbase, including VP of Product at Circle, Joao Reginatto, and Group Product Manager at Coinbase, Nemil Dalal, will join Circle CEO Jeremy Allaire to discuss USDC at 1 Billion, USDC 2.0 and the future of stablecoins.