The Summary
USD Coin majorly focuses on creating a stable cryptocurrency to bridge fiat to the blockchain. USDC works on the Ethereum blockchain and each USDC is issued as an ERC20 token. Each token is collateralized by a corresponding USD held in reserves. USDC was launched by the CENTRE consortium in October 2018. The centre is a partnership between Circle and Coinbase created to develop price-stable crypto assets and network protocols.
The Problem
The challenge to using a blockchain-based asset as a medium of exchange is price volatility. Volatility refers to the fluctuation of price in the market. The risk of crypto asset exchange to fiat currency is high and not viable for many reasons like latency, fees and security. Latency refers to the time taken to complete the transaction. The idea behind USDC is to create a blockchain-based stable coin that has strong governance, and transparency. The interference of institutions and banks in each transaction in the current payment system makes it slow and expensive.
As crypto assets have grown in their importance and adoption, it’s become vital to be able to use fiat currencies for payments and trading. Usage of fiat requires banks or institutional authorization where usually latency is high. Mainstream adoption of blockchain is impossible without a stable fiat collateralized digital asset.
The Solution
USDC solves these problems by offering a stable digital asset with detailed financial and operational transparency. As a fiat pegged cryptocurrency, the value of one USDC token is always 1$. USDC also publishes a monthly public attestation of 100% reserves of fiat tokens on CENTRE. The team insists on rules and guidelines for all members regarding the issuance and redemption of USDC. Investors in the crypto space can hedge their portfolio to USDC to stabilise the portfolio and institutions can use USDC to make cross border transactions and payments by mitigating the price risk of cryptocurrencies.
USDC is built on an open-source framework with an open membership scheme. USDC abides by the regulated framework of US money transmission law. USDC is an open architecture and membership-governed model and has partnered with many banking and financial institutions.
The Team
USDC is a product of the organization - Centre, which is a joint collaboration of Circle and Coinbase. The mission of this collaboration is to provide the governance and standards for the future digital financial ecosystem.
USDC is led by the management team of Circle. Jeremy and Sean Neville are the co-founders of Circle. The Circle is a global financial technology firm founded in October 2013. The Circle is led by a team of diverse leadership.
Jeremy Allaire - CEO & Chairman
Elisabeth Carpenter - COO
Dante Disparte - Chief Strategy Officer
Li Fan - Chief Technology Officer
Nikhil Chandhok - Chief Product Officer
Coinbase is led by the following team
Brian Armstrong - Co-founder & CEO at Coinbase
Emilie Choi - President & Chief Operating Officer
Surjit Chatterjee - Chief Product Officer
Alesia Haas - Chief Financial Officer
Paul Grewal - Chief Legal Officer
The Tokenomics
USDC is pegged against the US dollar on a 1:1 basis.
Every token in circulation is backed up by US$1 held in reserve.
Reserves are held in the Centre’s protected accounts.
USDC token issuance limit is set to infinite.
The token is generated by smart contracts as per the dollar deposits.
The Roadmap
There is no roadmap provided in the white paper.
In Conclusion
Center, the company founded jointly by Circle and Coinbase has strong trust and transparency, which supports the use of their token USDC in financial institutions. Stable coins like USDC have wide usage in the payment system. Apart from international remittances, USDC has high use cases in deploying DEX & DApps. DEX - decentralised exchange is a peer-to-peer marketplace where transactions occur directly between traders through automated algorithms. DApps is a decentralised application that runs on the blockchain network.
