Created my own token. What's next? Cryptocurrencies and marketing: the essentials detailed.

Stablecoins are a crucial part of the cryptocurrency market. These digital assets participate in almost all types of operations, from trading to providing liquidity and lending. The second-largest asset in this segment by market capitalization is USDC from Circle. The Incrypted team explored how this stablecoin works, what backs it, and why it is needed.

The instrument was launched by the Centre consortium, which included Coinbase and Circle. In August 2023, the cryptocurrency exchange announced the acquisition of a minority stake in its partner and the dissolution of the consortium structure. Since then, the stablecoin has been directly controlled by Circle, but Brian Armstrong's company remains a co-issuer de facto.

Circle Mint is designed for "enterprises and wholesale distributors issuing large volumes of USDC." According to the company, the platform is used by exchanges, institutional traders, digital wallet providers, consumer applications, and banks. Issuance and redemption of USDC are available in 185 countries—Circle Mint supports direct bank transfers and SEPA payments. Moreover, there are no fees for using the platform.

Retail consumers can purchase USDC on the secondary market—centralized and decentralized platforms or through P2P transactions.

What Backs USDC?

USDC is a fully collateralized stablecoin. To maintain parity with the US dollar, the issuer holds reserves equivalent to the volume of tokens in circulation. In November 2022, Circle transferred these assets into a special fund managed by BlackRock.

Previously, Circle held a small amount of commercial paper on its balance sheets, mainly bonds. However, by the time of writing, the company had changed its reserve structure: 80% of the assets are now represented by short-term US Treasury bills, while the remaining 20% are held in fiat currency.

USDC was initially launched on the Ethereum blockchain as an ERC-20 token. At the time of writing, the stablecoin natively operates on 15 networks:

• Ethereum
• Algorand
• Arbitrum
• Avalanche
• Base
• Flow
• Hedera

Investors can use USDC to add US dollars to their portfolios. Additionally, some protocols and trading platforms allow users to lock the stablecoin to earn interest. However, Circle's dependence on banking partners can negatively impact its operations.

How Cross-Chain USDC Transfers Work

1. A user initiates a transfer of USDC from one blockchain to another, specifying the amount and the recipient's address in the destination network. The protocol then burns the corresponding number of tokens on the "parent" blockchain.
2. The protocol requests transfer attestation from Circle, which must confirm the burning of assets and authorize the issuance of the specified amount of USDC on the destination network.
3. Upon receiving confirmation, the protocol initiates the issuance of the required volume of tokens in the target blockchain and sends them to the recipient's address.