Crypto payments company Circle will launch their US Dollar backed stablecoin (USDC) natively on the Arbitrum network.

Both Circle and Arbitrum made the announcement early Thursday morning on Twitter, with the official launch date set for June 8th.

Arbitrum is one of the most popular scaling solutions for Ethereum, accounting for more than 65% of total value locked on networks offering faster transactions and lower fees according to L2Beat. It uses a method called Optimistic Rollup, which involves “rolling” up bundles of transactions on a sidechain, before reporting back to Ethereum with a single transaction.

Layer 2 networks, like Arbitrum, sit on top of Layer 1 blockchains, in this case Ethereum, leveraging the former’s security model. Users usually migrate to these L2 solutions in search of lower fees and faster transactions. To do so, however, users must move funds from L1 to L2. This movement is what’s known as “bridging.”


At the moment, Arbitrum uses a bridged version of USDC from Ethereum, which will be renamed to “USDC.e.” Think of this token as a receipt that users can redeem back on Ethereum for “real” USDC.

“There will be no immediate changes to the Arbitrum Bridge” said Arbitrum’s Twitter account, although the team noted that users can expect it to be replaced by the native stablecoin launching next week.

According to an official post by the Arbitrum Foundation, there are a series of benefits to using native USDC on their platform. These include institutional on- and off-ramps via Circle and their partners. It also means USDC will work on the Cross-Chain Transfer Protocol (CCTP), which eliminates a “lock-and-mint” bridge and instead burns USDC on a native chain to then mint new USDC for the same amount on the destination chain.


That means rather than having locked USDC and minting USDC.e, users will burn USDC on the source chain, wait for Circle’s attestation and confirmation, and then mint new tokens on the destination chain, in this case Arbitrum.

USDC and its parent company, Circle, have been in the news this year for not-so-great reasons. They came under fire during the Silicon Valley Bank collapse, when the stablecoin lost its peg and Circle announced a $3.3 billion exposure to the failing institution.

The US dollar backed stablecoin has lost substantial market share over the past year, according to Coingecko.

Exactly one year ago, its market capitalization stood at $54 billion. As of today it's almost half that, currently sitting at a $28 billion market cap. Stablecoins, like USDC, are pegged to the US dollar. And because they're meant to hold their price, rather than fluctuate, their market cap tends to be closely correlated with their circulating supply. These tokens are minted or burned by people buying or redeeming these tokens, which by the numbers mentioned, indicates an important drop in interest for using USDC.

Arbitrum currently sits at #38 on Coingecko, with its native token ARB trading at $1.16, clocking a mere 0.6% increase on the day.

Stay on top of crypto news, get daily updates in your inbox.