USD Coin (USDC-USD) is taking lots of good with only a little bit of bad today. On one hand, the stablecoin is losing out at the hands of Binance (BNB-USD), who is dropping support for the coin. But it now appears that USDC will be serving an important role in the Cosmos (ATOM-USD) ecosystem, taking the place of the hyper-volatile TerraClassicUSD (USTC-USD). The news is just one part of a multi-chain expansion that will greatly boost USDC’s role in the decentralized finance (DeFi) world.
Indeed, USDC has been reckoning with some rather disappointing news over the last few weeks. Binance, the world’s largest crypto exchange, is dropping support for USDC trades on its platform, as well as several others. The move comes as part of an effort by Binance to increase numbers for its Binance USD (BUSD-USD) stablecoin.
It’s not a full de-listing that USDC is facing. Users can still deposit USDC to their Binance accounts, and withdraw it just the same. However, when a user deposits USDC, Binance will automatically convert it into BUSD for trading purposes. This enhances the liquidity of BUSD while making it one of the only remaining stablecoins available to trade with on the app. Effectively, this won’t make a difference for users of USDC, but it will reflect poorly on USDC trading volumes.
Today, this major change for the exchange is beginning to take place. And the effect on USDC is immediate; the stablecoin’s market capitalization is dropping by 5% already. However, Circle, the company that develops USDC, isn’t letting the bearishness get to it. The company is keying investors in on a major update.
USDC Expands to Five New Blockchains
While the Binance news isn’t great for USDC, Circle is appeasing its users by announcing a slew of good news. Most prominently, the stablecoin is taking a major role in one of the most popular decentralized application (dapp) ecosystems. The partnership is just one of five new blockchains the stablecoin will be expanding into.
The Cosmos network has been in disarray for most of the year, but nothing hurt it like the collapse of Terra (LUNA-USD). The Terra network was, at one point, the largest project in the Cosmos ecosystem. And its stablecoin, now rebranded to USTC, was the stablecoin underlying every DeFi app within that ecosystem. When its price de-pegged, though, and spiraled out of control, many of those dapps had to turn to less secure stablecoin assets to keep operations rolling.
In an attempt to restore Cosmos to the popularity it held prior to the Terra fiasco, developers are teaming up with Circle to give USDC the role that USTC once held. Circle will be issuing USDC natively on the Cosmos network, allowing DeFi apps a more secure stablecoin through which users can borrow, lend and stake. It will also reduce the need for users to move stablecoins to the network via blockchain bridges. This is a major plus, as crypto bridges are one of the least secure ways to move assets.
Circle isn’t stopping there, though. The company will be issuing native USDC to four other blockchains as well. These include Polkadot (DOT-USD), Optimism (OP-USD), Near (NEAR-USD) and Arbitrum. Circle executive Joao Reginatto exalts the move as a big win for the company, even amidst the bad news, saying this expansion will help “institutions, exchanges, developers and more to innovate and have easier access to a trusted and stable digital dollar.”
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
