Trading

·

January 31, 2024

Native and bridged USDC: differences and uses

Anthony Allen

Stablecoins like USDC are used to tokenize dollars, take profits and escape the volatility of other cryptocurrencies. Learn the difference between native and bridged USDC to know which is safe to use.

As a DeFi trader, you will often use stablecoins such as USDC, USDT, DAI, and others to take profit, sideline capital until a new opportunity arises, or manage and account for your fiat dollars in tokenized form. USDC is one of the most popular stablecoins, which has led to high demand and a large number of copies that do not have official backing. 

The large number of bridged versions of USDC across networks, like USDC.e on Avalanche and USDbC on Base, makes it difficult to tell if you’re using the official USDC issued by Circle, or an unofficial version that can’t be redeemed for dollars. Let’s uncover the differences between native USDC and bridged USDC, to help you make the right choice next time you trade. 

What is native USDC?

Native USDC (USD Coin) is a stablecoin originally issued as an ERC-20 token on Ethereum, fully backed by dollar or dollar-equivalent reserves. As Circle will redeem these tokens for one dollar each, their price should always be close to a dollar.

Native USDC can be considered as connected to the bank which holds the dollar supply. It can be redeemed for real USD or exchanged for native USDC on other networks while maintaining this relationship. It can also be swapped for other tokens, including bridged USDC, but will no longer be directly redeemable.

Diagram showing relationship of USDC to bank reserves and other cryptocurrencies using CCTP or cross chain swaps.
Native USDC can be moved across networks using Circle's CCTP or cross chain swaps.

Since the use of stablecoins is fundamental to many crypto trading strategies, demand for USDC and other stablecoins on other networks is high. This has led to issuers like Circle, which mints USDC, to provide native stablecoins on multiple blockchains, which can be exchanged using the Cross Chain Transfer Protocol (CCTP). 

USDC is now officially available on a total of 15 networks, where it is issued and managed by Circle. Circle maintains the token supply by minting new USDC or burning excess coins to ensure an equal balance between tokens in circulation and the amount of dollar reserves which back it. 

What is bridged USDC?

As an ERC-20 token, USDC can interact with smart contracts and be transferred to other networks using a bridge protocol. These protocols essentially lock the USDC in a smart contract and then issue a copy of it on a new network. Bridged tokens are present in other forms as well, often impersonating a token with high demand.

On networks where no native version of USDC has been issued, other organizations, including protocols themselves, may bridge USDC using the smart contract method mentioned above. 

Table comparing native USDC and bridged USDC.
Differences between bridged USDC and native USDC issued by Circle.

Since these bridged versions are no longer directly managed by Circle, they have no direct relationship to the dollar reserves held in the bank and are not redeemable for dollars.

Historically, bridged versions of USDC could even be given the same name, but more recently they have been assigned a new name to avoid confusion. That is why USDC.e, USDbC, aUSDC, USDCPO, and other variants exist.

Why there are multiple types of USDC on one network

Bridged versions of USDC are usually created on networks where no native USDC exists. Yet there have been many instances where Circle have later issued native USDC on the network as well. As a result, the bridged assets will exist alongside the native asset, and all can be traded and transferred. 

This is what happened with USDbC, a bridged version of USDC that launched with Base chain. Within a few weeks of launch, Circle deployed native USDC on Base, where it continues to exist alongside USDbC. 

Trade volumes of USDbC and native USDC on Base remain similar even today. Image: 0x Explorer.

In these situations, the bridged asset may have more trading volume than the native version, as it is in wider circulation and more traders hold it in their accounts. When searching for tokens on Matcha and other platforms, assets are usually sorted based on trade volume and therefore you may see a bridged version appearing ahead of the native USDC.

How safe is bridged USDC? 

Official USDC which has been minted by Circle is backed by dollars or dollar-equivalent assets and protected by the same cryptography that secures cryptocurrency assets, so it is widely trusted and used for billions of dollars in transactions each day. 

Since anyone could create a smart contract that reissues USDC on new networks, however, bridged assets may be issued without the official consent of Circle and without the backing of its USD reserves. In cases where USDC is bridged like this, it may not be backed and could be unsafe to use for several reasons.

  1. The smart contract creator will have keys to the contract and be able to drain any locked funds. 
  2. You will not be able to trade the bridged USDC for dollars if you decide to cash out. 
  3. The bridged USDC may not have much liquidity, making it difficult and expensive to use.
  4. The bridged asset is more likely to break its peg, leaving you with imitation USDC with a much lower value than USDC. 

Bridged USDC may be tied to the value of the original USDC deposit on Ethereum through a smart contract (or another network where USDC is issued by Circle - see below), but can’t be redeemed directly for dollars if you ever want to cash out. 

Assets like bridged USDC Linea and Scroll are unofficial versions of USDC which have been bridged to a new network by adhering to the Bridged USDC Standard laid out by Circle and are relatively safe to use. This standard gives Circle the option to later upgrade the token contract to native USDC and assume ownership of the token, but they may choose not to do so. 

Unless you hold USDC issued by Circle or a version bridged following Circles standards, you may want to convert them for the native token. While many issuers may be trustworthy, and use an alternative ticker symbol (i.e. USDC.e instead of USDC) to transparently show that the token is a bridged version, there will be other cases where the bridged token is meant to deceive you into believing that you are using official USDC.

Swap USDC or bridged USDC for another token

Whether you are holding official USDC or a bridged variant in your account, you can easily swap your bridged USDC for native USDC or swap for another token using Matcha. Swaps let you trade instantly for a token on the same chain or you can exchange directly for a token on a different network using a cross chain swap

Swap USDC now on Matcha

It is always safer to use a stablecoin that is backed by dollars and transparent about its reserves, than one which has been bridged by a third party. With over 5 million tokens supported by Matcha, deep liquidity and no charges on standard swaps, you can efficiently move your assets to or from native USDC without friction and only pay the onchain fees - swap now

Networks supporting native USDC

Circle is regularly expanding native USDC support to new chains. Native USDC is available on the following chains, using the official contract address listed next to it:

If in doubt, refer to the list of supported blockchains on Circle’s website.

Networks using bridged USDC

A variety of bridged USDC can be found on almost every blockchain, often with more than one version available, and it is therefore difficult to provide an exhaustive list. Unofficial bridged USDC versions on Matcha with high trade volumes include:

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Trading

·

January 9, 2024

Native and bridged USDC: differences and uses

Native and bridged USDC with USDC symbol

Stablecoins like USDC are used to tokenize dollars, take profits and escape the volatility of other cryptocurrencies. Learn the difference between native and bridged USDC to know which is safe to use.

As a DeFi trader, you will often use stablecoins such as USDC, USDT, DAI, and others to take profit, sideline capital until a new opportunity arises, or manage and account for your fiat dollars in tokenized form. USDC is one of the most popular stablecoins, which has led to high demand and a large number of copies that do not have official backing. 

The large number of bridged versions of USDC across networks, like USDC.e on Avalanche and USDbC on Base, makes it difficult to tell if you’re using the official USDC issued by Circle, or an unofficial version that can’t be redeemed for dollars. Let’s uncover the differences between native USDC and bridged USDC, to help you make the right choice next time you trade. 

What is native USDC?

Native USDC (USD Coin) is a stablecoin originally issued as an ERC-20 token on Ethereum, fully backed by dollar or dollar-equivalent reserves. As Circle will redeem these tokens for one dollar each, their price should always be close to a dollar.

Native USDC can be considered as connected to the bank which holds the dollar supply. It can be redeemed for real USD or exchanged for native USDC on other networks while maintaining this relationship. It can also be swapped for other tokens, including bridged USDC, but will no longer be directly redeemable.

Diagram showing relationship of USDC to bank reserves and other cryptocurrencies using CCTP or cross chain swaps.
Native USDC can be moved across networks using Circle's CCTP or cross chain swaps.

Since the use of stablecoins is fundamental to many crypto trading strategies, demand for USDC and other stablecoins on other networks is high. This has led to issuers like Circle, which mints USDC, to provide native stablecoins on multiple blockchains, which can be exchanged using the Cross Chain Transfer Protocol (CCTP). 

USDC is now officially available on a total of 15 networks, where it is issued and managed by Circle. Circle maintains the token supply by minting new USDC or burning excess coins to ensure an equal balance between tokens in circulation and the amount of dollar reserves which back it. 

What is bridged USDC?

As an ERC-20 token, USDC can interact with smart contracts and be transferred to other networks using a bridge protocol. These protocols essentially lock the USDC in a smart contract and then issue a copy of it on a new network. Bridged tokens are present in other forms as well, often impersonating a token with high demand.

On networks where no native version of USDC has been issued, other organizations, including protocols themselves, may bridge USDC using the smart contract method mentioned above. 

Table comparing native USDC and bridged USDC.
Differences between bridged USDC and native USDC issued by Circle.

Since these bridged versions are no longer directly managed by Circle, they have no direct relationship to the dollar reserves held in the bank and are not redeemable for dollars.

Historically, bridged versions of USDC could even be given the same name, but more recently they have been assigned a new name to avoid confusion. That is why USDC.e, USDbC, aUSDC, USDCPO, and other variants exist.

Why there are multiple types of USDC on one network

Bridged versions of USDC are usually created on networks where no native USDC exists. Yet there have been many instances where Circle have later issued native USDC on the network as well. As a result, the bridged assets will exist alongside the native asset, and all can be traded and transferred. 

This is what happened with USDbC, a bridged version of USDC that launched with Base chain. Within a few weeks of launch, Circle deployed native USDC on Base, where it continues to exist alongside USDbC. 

Trade volumes of USDbC and native USDC on Base remain similar even today. Image: 0x Explorer.

In these situations, the bridged asset may have more trading volume than the native version, as it is in wider circulation and more traders hold it in their accounts. When searching for tokens on Matcha and other platforms, assets are usually sorted based on trade volume and therefore you may see a bridged version appearing ahead of the native USDC.

How safe is bridged USDC? 

Official USDC which has been minted by Circle is backed by dollars or dollar-equivalent assets and protected by the same cryptography that secures cryptocurrency assets, so it is widely trusted and used for billions of dollars in transactions each day. 

Since anyone could create a smart contract that reissues USDC on new networks, however, bridged assets may be issued without the official consent of Circle and without the backing of its USD reserves. In cases where USDC is bridged like this, it may not be backed and could be unsafe to use for several reasons.

  1. The smart contract creator will have keys to the contract and be able to drain any locked funds. 
  2. You will not be able to trade the bridged USDC for dollars if you decide to cash out. 
  3. The bridged USDC may not have much liquidity, making it difficult and expensive to use.
  4. The bridged asset is more likely to break its peg, leaving you with imitation USDC with a much lower value than USDC. 

Bridged USDC may be tied to the value of the original USDC deposit on Ethereum through a smart contract (or another network where USDC is issued by Circle - see below), but can’t be redeemed directly for dollars if you ever want to cash out. 

Assets like bridged USDC Linea and Scroll are unofficial versions of USDC which have been bridged to a new network by adhering to the Bridged USDC Standard laid out by Circle and are relatively safe to use. This standard gives Circle the option to later upgrade the token contract to native USDC and assume ownership of the token, but they may choose not to do so. 

Unless you hold USDC issued by Circle or a version bridged following Circles standards, you may want to convert them for the native token. While many issuers may be trustworthy, and use an alternative ticker symbol (i.e. USDC.e instead of USDC) to transparently show that the token is a bridged version, there will be other cases where the bridged token is meant to deceive you into believing that you are using official USDC.

Swap USDC or bridged USDC for another token

Whether you are holding official USDC or a bridged variant in your account, you can easily swap your bridged USDC for native USDC or swap for another token using Matcha. Swaps let you trade instantly for a token on the same chain or you can exchange directly for a token on a different network using a cross chain swap

Swap USDC now on Matcha

It is always safer to use a stablecoin that is backed by dollars and transparent about its reserves, than one which has been bridged by a third party. With over 5 million tokens supported by Matcha, deep liquidity and no charges on standard swaps, you can efficiently move your assets to or from native USDC without friction and only pay the onchain fees - swap now

Networks supporting native USDC

Circle is regularly expanding native USDC support to new chains. Native USDC is available on the following chains, using the official contract address listed next to it:

If in doubt, refer to the list of supported blockchains on Circle’s website.

Networks using bridged USDC

A variety of bridged USDC can be found on almost every blockchain, often with more than one version available, and it is therefore difficult to provide an exhaustive list. Unofficial bridged USDC versions on Matcha with high trade volumes include:

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