GM DOers! š
Arbitrum is now enjoying the perks of native USDC. š
USDC is now natively available on @Arbitrum, a leading L2 scaling solution for Ethereum:
Arbitrum USDC Now Available
Arbitrum USDC is here! Weāre excited to announce that USDC is now available natively on Arbitrum for developers and their users. Learn more.
1,049
But to understand what that means and why it matters, we need to talk about bridges. š
Just as your auntās laptop, secured with her catās name as a password, is prone to being hacked, so are the bridges in the world of crypto (PSA: this is very important to understand if you are playing in the web3 sandbox).
In fact, last year, out of the 10 largest crypto hacks and exploits that amounted to $2.1B in stolen assets, 6 were due to bridge hacks. š²
Some notable instances include:
The BNB chain bridge, which lost $500M (most of it was recovered)
Yikes! Another bridge hack resulting in over $500M stolen funds
Makes you think that bridges donāt work. Canāt keep count of all the bridge hacks (bugs) this year alone.An exploit on a cross-chain bridge, BSC Token Hub, resulted in extra BNB. We have asked all validators to temporarily suspend BSC. The issue is contained now. Your funds are safe. We apologize for the inconvenience and will provide further updates accordingly.The Nomad token bridge exploit, with losses amounting to $190M
The Ronin bridge hack, which experienced a staggering loss of $612M.
These exploits have, understandably, created a sense of unease among web3 users, many of whom are now hesitant to bridge their assets across different chains. š¬
Itās why many didnāt get an Arbitrum airdrop ā they were too afraid to bridge even though thereās a HUGE difference between how the bridges that were exploited work vs how L2 bridges work.
So thereās definitely a problem. However, we can see light at the end of the tunnel with Circleās release of native USDC on Arbitrum. š¤©
Why?
Because theyāre now changing the way we bridge our tokens, offering a much safer and quicker way.
In this article, I am going to teach you:
How bridges typically work
How Circleās new and innovative way is supposed to work
What are the benefits of this move
So letās get into it. Stick around until the end, especially if you have any USDC on Arbitrum. Iāll tell you what you need to know about migrating your tokens to native USDC.
By the way, bridging assets to various chains will be completely hidden to the average user in years to come (aka web3 mullet).
So understand that this wonāt matter to the masses, however, currently this is interesting to us because we are early and still building the underlying infrastructure that will enable billions to use web3 seamlessly in the future.
Letās get into it.
š Lens Protocol: The Future of Social Media
Decentralized social media finally allows creators to own their content, data and followers. Thatās why we choose to build part of our media platform on Lens Protocol.
How Do Bridges Work and Whatās Cross-Chain Transfer Protocol? š
Blockchain bridges enable the transfer of assets and data between different blockchain ecosystems, either via the wrapped asset method or the liquidity pool method.
In the wrapped asset method, a user's native asset on Blockchain A gets locked up and an equivalent amount of a wrapped asset is issued on Blockchain B.
This process is like when you go bowling. The bowling alley takes your own shoes and gives you bowling shoes (see these as bridged assets), which you can use. When youāre done, you return the bowling shoes and take back your own shoes.
The liquidity pool method works a bit differently. Instead of locking and wrapping assets, these bridges use liquidity pools - somewhat similar to currency exchanges.
When a user wants to transfer an asset from one chain to another, the bridge uses its pool to send the required funds to the user.
Regardless of the method, the central issue lies in the fact that assets must be locked up or controlled by another party during transfer, creating potential weak points for attackers.
This has made both types of bridges prone to hacks, as evidenced by several incidents in the past.
When it comes to Layer 2 bridges (bridges between Optimism and Arbitrum for example), they work slightly differently and are much safer than the Layer 1 bridges explained above.
We wonāt get into the technicalities of how it works. All you need to know is that all these L2 platforms share the same underlying security from the Layer 1 Ethereum blockchain, which makes it safer than bridging between different Layer 1 blockchains.
Still, there are some risks with L2 bridges too. Risks that CCTP wants to mitigate. Letās see how:
Meet Cross-Chain Transfer Protocol (CCTP) š¤
To overcome these vulnerabilities, a new solution is being introduced by Circle (the company behind USDC), called Cross-Chain Transfer Protocol (CCTP).
Stay tuned for more details.
Learn more:
Cross-Chain Transfer Protocol (CCTP) | Circle
Cross-Chain Transfer Protocol (CCTP) enables USDC to flow natively across blockchains ā unifying liquidity and simplifying user experience. Learn more.
This will be live on the 27th of June!
CCTP offers a safer and more efficient method for transferring assets across chains.
It operates by burning native USDC on the source chain and minting an equivalent amount on the destination chain.
Itās essentially teleporting assets from one blockchain to another.
This process eliminates the need to lock up assets, reducing the security risks associated with conventional bridges.
Hereās a simplified breakdown of how CCTP works:
USDC is burned on the source chain: Users initiate a transfer of USDC from one blockchain to another through an app, and the specified amount of USDC is burned on the source chain.
A signed attestation is fetched from Circle: Circle witnesses the burn event on the source chain and provides an attestation or authorization to mint the equivalent amount of USDC on the destination chain.
USDC is minted on the destination chain: Using Circle's attestation, the app triggers the minting of USDC on the destination chain, sending the new USDC to the recipient's wallet.
Level up your game in web3! š
Receive weekly onchain reports combined with industry insights to understand where this space is going to successfully build and invest in web3.
By being a PRO, youāre not only limited to our reports! Weāll airdrop you an NFT that grants you access to our bi-weekly events along with perks & early access to various web3 protocols.
Ready to capitalize on the opportunity?
What Are The Benefits Of CCTP?
Bringing native USDC to Arbitrum is more than just a headline; it's a game-changer. Here's why:
Bye-Bye, Lock-ins
The best part is perhaps that your money isnāt stuck in a smart contract or with a custodian anymore when bridging.
Itās literally teleported from one blockchain to another, which makes everything much safer.
In theory. We have no idea how this will actually play out.
Your USDC is Safe and Sound
Right now, (most of) the USDC on Arbitrum is bridged USDC, meaning that itās not the real thing necessarily.
Having a native USDC token on Arbitrum allows Circle to ensure that thereās a 1:1 $USD to $USDC ratio.
Big Players, Big Moves
With native USDC on Arbitrum, big institutions can jump in and out of crypto easily, thanks to Circleās infrastructure.
They offer this service for institutions already on Ethereum but cannot do the same on Arbitrum at the moment because institutions would have to bridge, a risk theyāre not willing to (nor should they) take.
Speedy Transfers on the Horizon
With the current bridging infrastructure, it happens that thereās unlock delays occurring. But with CCTP, youād be able to whip your USDC across different chains (which support CCTP) without the typical wait times.
Thatās way better UX and weāre all for it.
š¤ Thanks to our trusted exchange partner, BYDFi.
We believe that weāre in the early stages of a bull run and thereās no better time to buy crypto. This is when you should be practising monthly dollar cost averaging into strong network tokens like Ethereum and Bitcoin. šŖ
And if youāre buying itās important to do so with a licensed and reputable exchange. Thatās why we recommend using BYDFi. š
Register Now For New User Rewards
Wrapping Up: What To Know About Migrating Your Assets
First, the Ethereum-bridged version of USDC, currently available on Arbitrum, is renamed "USDC.e" on block explorers.
Similar changes are reflected in the user interface and documentation of ecosystem apps.
For clarity, the Bridged USDC, or USDC.e, can be identified by the token address 0xff970a61a04b1ca14834a43f5de4533ebddb5cc8.
The newly introduced native USDC issued by Circle will bear the token symbol "USDC" and can be recognized by the token address 0xaf88d065e77c8cC2239327C5EDb3A432268e5831.
Now, even though Circle implemented native USDC on Arbitrum last week, there arenāt any immediate changes.
Arbitrum will be collaborating with ecosystem apps to facilitate a smooth transition of liquidity from bridged USDC to native USDC over a period of time.
What should you do now?
The first thing to always be aware of is attacks! With any migration or change, comes impersonators looking to scam you of your crypto!
I know this is a pain in the butt. But for now, until things are fully transitioned, please make sure to be aware of the token addresses I mentioned above.
The second thing is to understand how this will play out for the future of layer 2s.
We just had a PRO Eyes On Chain event in Discord Yesterday and we were talking about how everything thatās happening onchain will move over to L2s, because these offer the scalability and cheap fees that arenāt possible on the Ethereum layer 1.
Weāll send the recording of our PRO Eyes On Chain event tomorrow, along with a report breaking down the most important charts in web3 right now!
To get the report to your inbox, make sure youāre a PRO!
Right now, migrating your assets from Ethereum layer 1 to a layer 2 comes with some uncertainty and risks.
CCTP and native USDC will essentially enable smoother and safer operations for both institutions and retail investors to interact with web3.
The third thingā¦ How can you capitalize?
Watch whatās being built in web3 and invest your time building on top of the protocols that are shipping. Arbitrum is certainly one of those protocols and most likely a future web3 leader.
Furthermore, if youāre going to invest any money outside of ETH and BTC, invest it in the protocols and teams that are building stuff that will facilitate mass adoption to occur by building deep into the tech stack.
Thanks for reading. And remember, you're strong, youāre powerful, youāre alpha! ā¤
See you soon. ā
Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.
