Circle Internet Financial, the manager of dollar-backed stablecoin US Dollar Coin (USDC), has integrated layer-2 scaling chain Arbitrum into its Web3 infrastructure platform, according to a Sept. 12 blog post.
The Web3 platform brings USDC-centric programmable wallets, smart contract tooling, and gas-fee abstraction to Arbitrum, the blog post said. With total value locked (TVL) of around $2.5 billion, Arbitrum is Ethereum’s (ETH) largest layer 2, according to DefiLlama.
The platform helps developers “build frictionless in-app wallets that support USDC for global payments, e-commerce, [and] gaming,” among other use cases, Nikhil Chandhok, Circle’s chief product officer, said in a post on the X platform.
Stablecoins by market capitalization. Source: CoinMarketCap
Circle’s Web3 tooling is also integrated with blockchain networks including Avalanche, Ethereum, Polygon PoS, and Solana, the blog post said.
The integration is Circle’s latest bid to accelerate USDC adoption as the stablecoin competes for market dominance against Tether’s USDT. At approximately $35 billion, USDC’s total market capitalization significantly lags behind that of rival USDT, which exceeds $118 billion, according to CoinMarketCap.
PayPal’s US dollar-backed stablecoin, PayPal US (PYUSD), which launched in 2023, has added to the competition. It crested $1 billion in total market capitalization in August.
In 2023, Circle made USDC available natively on Arbitrum, allowing applications to mint USDC directly on the layer-2 instead of needing to bridge USDC from other chains. It also integrated Arbitrum into its cross-chain transfer protocol, which effectively enabled free USDC bridging by managing minting and burning across chains.
Arbitrum is an especially important platform for Circle because of its status as the de-facto hub for decentralized finance (DeFi) among layer-2s. According to DefiLlama, Arbitrum is home to almost $4.7 billion worth of stablecoins, used in applications ranging from lending, to decentralized exchanges (DEX), to leveraged perpetual trading.
Arbitrum has also been gaining traction in tokenized real-world assets (RWA), which could become a multi-trillion dollar market in the coming years, one executive at rival blockchain network Polygon told Cointelegraph in August.
On Aug. 27, Ondo Finance, an RWA protocol, announced it was expanding access to Ondo US Dollar Yield Token (USDY) to Arbitrum. On Aug. 8, asset manager Franklin Templeton announced it was expanding FOBXX to the scaling chain.
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