US Dollar Coin (USDC)

A stablecoin aiming to be pegged to the dollar. Built by Coinbase, Circle and CENTRE.

US Dollar Coin

Type	Stablecoin
Website	https://www.centre.io/usdc

Basics

• Founded in:
• Based in: USA
• Mainnet release:
• An open source, smart contract-based dollar-backed stablecoin created by CENTRE, backed by Coinbase and Circle. CENTRE's purpose is to create, support and govern the USDC protocol and network.
• "CENTRE’s technology for fiat-backed stablecoins brings stability to crypto. The initial implementation is USD Coin (USDC), an ERC-20 token creating possibilities in payments, lending, investing, trading and trade finance — and the ecosystem will grow as other fiat currency tokens are added."

History

On 11-3-2023 USDC broke its peg forcefully after it became know that Circle held funds within failing SVB. It went as low as 0.87c before rebounding the day after to 0.97c.

Audits & Exploits

• Bug bounty program can be found [insert here].

Token

Token Details

• Is a centralized stablecoin pegged to the dollar.

Coin Distribution

• From CoinDesk (3-7-2021):

"Nearly all of the USDC supply on Tron is concentrated in the top 10 addresses."

Tech

• Whitepaper can be found [insert here].
• Code can be viewed [insert here].

Implementations

• Built on: Ethereum "The initial implementation is USD Coin (USDC), an ERC-20 token.", Algorand.
• From CoinDesk (1-7-2021):

"“We anticipate that in the coming months USDC will become available on Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, Tezos, and Tron,” according to a draft announcement from USDC administrator CENTRE obtained by CoinDesk."

• USDC launched on Hedera (20-10-2021). Got launched on Flow on 1-2-2022. Got launched on Avalanche (31-12-2022).

How it works

• Dose of DeFi explained both USDC and BUSD (27-5-2022):

"These fiat-backed stablecoins come with the implicit promise that they can always be redeemed for a dollar in a bank. Both are tied to huge exchanges (Coinbase and Binance) and have a smooth arbitrage loop for when they’re trading below a dollar. When above a dollar, investors are incentivized to deposit from their bank account, mint more USDC or BUSD, and sell into the market."

Upgrades

• From Decrypt (24-6-2020):

"Centre announced a multi-chain framework for supporting USDC on non-Ethereum blockchains. Algorand will be the first to receive stablecoins powered by USDC."

• From EthHub #129 (1-9-2020):

"The "USDC 2.0" update will allow services that offer USDC support to pay transaction fees (gas) for their users."

Interoperability

• Is not relying solely on Ethereum anymore after it also integrated on Algorand (9-9-2020).
• Will also be on Stellar (15-10-2020).
• The USDC stablecoin will be (21-10-2020) available on the Solana blockchain.

Compliance

• USD Coin is issued by regulated and licensed financial institutions that maintain full reserves of the equivalent fiat currency. CENTRE notes that issuers are required to regularly report their USD reserve holdings, and Grant Thornton LLP issues reports on those holdings every month.
• Circle confirmed freezing $100K in USDC at law enforcement’s request (9-7-2020). This appears to be the first time an address was blacklisted, as noted in an earlier report by The Block.
• From Bitcoin.com (25-5-2021):

"USDC is late producing its attestation documents, according to data taken from its own transparency website. The attestations, that are scheduled to be produced monthly have stopped, with the last one dealing with February’s funds released last April 27, a considerable delay from its normal issuance date. To make things worse, the crypto asset has experienced explosive growth since February. Its market cap has gone from 9 billion USDC on February 28 to 20 Billion USDC at the time of writing, more than doubling its issuance in just a few months according to numbers taken from Coingecko."

Looking at the transparency page, weirdly enough a new report on March was released the 24th, 1 day before the above article of Bitcoin.com. The report concluded that "The US Dollars held in custody accounts are at least equal to or greater than the USDC tokens outstanding". This would show that either Bitcoin.com had been slacking, or the report is dated from the 24th but was released later. Either way, USDC being late on reports is still something to keep track of.

Roadmap

• Can be found [Insert link here].

Usage

Projects that use or built on it

• Since June 1st 2020, USDC transaction volume on Ethereum has increased 1064%. USDC has passed ETH as the largest source of MakerDAO collateral. Required to create more DAI & keep the peg near $1.

• From CoinDesk (20-11-2020):

"Is working with the U.S. government to bypass Nicolás Maduro and support the Bolivarian Republic of Venezuela led by Juan Guaidó.

• From Decrypt (2-12-2020):

"Visa has announced a partnership with Circle Internet Financial and will be integrating its USDC stablecoin."

• The circulating supply of USD coin (USDC) on the Tron blockchain has surpassed 108 million in less than a month (3-7-2021).

Competition

• $-pegged stablecoins in general, but centralized ones more specifically. Other well known examples of centralized stablecoins are issued by Tether, Paxos and Binance. The most well known decentralized stablecoin alternative is DAI, which has been collateralized partly by USDC since 2020. It has reached around 40% of the collateral (6-2021). Some therefore call DAI a semi-decentralized stablecoin.

Pros and Cons

Pros

• Circle and Coinbase are well known and respected companies in the space. People therefore trust it to be solvent.

Cons

• From this blog by Set (25-5-2020):

"USDC is a stablecoin tied to the US dollar created by Circle and Coinbase. It is 100% centralized and, like WBTC, has a pause function built right into its smart contract that would allow Circle or Coinbase to freeze anyone's USDC assets at any time.

If this function was called to freeze USDC deposited into Sets as collateral, the expectation is that any Sets collateralized by USDC would potentially become worthless (depending on if the assets were unfrozen at a later date)."

• Funds indeed got frozen (8-7-2020).

Team, Funding, Partnerships, etc.

Team

• Full team can be found [here].
• Jeremy Allaire; CEO

Partners

• From CoinDesk (20-11-2020):

"Is working with the U.S. government to bypass Nicolás Maduro and support the Bolivarian Republic of Venezuela led by Juan Guaidó. CEO Jeremy Allaire told CoinDesk this was his company’s first government partnership. According to the company’s blog post, the Treasury Department and the Federal Reserve deposit funds seized by the U.S. into a bank account in the U.S. tied to the Guaidó government, which converts the funds into USDC that Circle then sends to Airtm."

• From Decrypt (2-12-2020):

"Visa has announced a partnership with Circle Internet Financial and will be integrating its USDC stablecoin."