Yesterday, Circle announced that it plans to release v2.2 for USD Coin (USDC) and Euro Coin (EURC) with the aim of improving some aspects of these stablecoins.
The main advantage of the update is related to reducing transaction fees by approximately 7%.
There are other factors that make Circle’s stablecoins more attractive, such as increased security in EVM networks and advances in cryptographic resource efficiency.
The new version will autocomplete from now until January 2024 and requires no community intervention.
All of this could help USD coin (USDC) regain some of the market share it lost during 2023 to its competitor USDT.
Let’s see all the details below.
Circle and version 2.2 which improves some aspects of USD coin (USDC) and EURO coin (EURC) stablecoins
The new version, as a process plan for expanding USDC resources, includes 6 key changes the most interesting of which concerns signature validation directly from the wallet smart contracts using EIP-1271.
Other improvements include a reduction in the cost of fuel, better support for crypto account abstraction, and a more consistent measure safety for all transactions carried out on EVM networks.
Circle itself announced all of these upcoming deployments on its blog:
“There will be six new changes to the USDC and EURC smart contracts and will be implemented through one v2.2 update for each supported EVM blockchain.”
Going into the details, we can see how, according to what has been communicated, v2-2 should reduce costs for stablecoin operations by 6-7% in case of transfer, payment or exchange.
Users will also be able to choose to pay fees gas of the network on which they operate, directly in USD coin or EURO coin.
The gas savings come from optimizing the block list control process in the smart contracts of the two stablecoins controlled by Circle.
The user experience will actually be improved through a feature that allows you to do this transfer cryptocurrencies from the smart contract wallet to other entities private keysimproving account abstraction support.
Among other things, the safety concept will also be significantly improved as the update includes the introduction of dmeasures to combat the dangers arising from jaw EVM blockchain.
Users will be protected from malicious use of their funds on unofficial forks.
Security company Halborn played a key role in all of this, checking all code changes to ensure nothing went wrong.
The update will start soon on the Avalanche Fuji testnet and then roll out to other mainnets through a phased process.
The main network Ethereumwhich is most important in this context as it contains most of the USD coin supply, will be updated in January 2024.
State of the USDC market
As mentioned, the new version v2.2 announced by Circle is part of a USD coin (USDC) and EURO coin (EURC) expansion process.
In particular, the euro-linked digital asset is still far from competing with its competitors EURT and EURS, which are worth over 10 times more than the Circle stablecoin in total.
As for the diamond product USD Coin (USDC)during the year 2023 we witnessed a a sharp reduction in supply (and at the same time capitalization) in favor of growth USDTa cryptocurrency pegged to the US dollar managed by Tether.
Specifically, since January 1, 2023, USDC has lost $21.7 billion while USDT has gained $16.4 billion.
Circle will use the update as a measure to counter the increasingly strong progress of the cryptocurrency Tether, which recently reached its all-time highs in terms of capitalization.
The loss of strength of the USD coin is visible up close looking at the following chart comparing the number of addresses that have balances greater than 1,000, 10,000, 100,000, 1,000,000 and 10,000,000 USDC.
In all cases, they occurred since the beginning of the year falls in the number of holderssometimes even more than 50%.
In more detail, compared to January 1, there are 68,000 fewer addresses with balances greater than $1,000, 36,000 fewer addresses with balances greater than $10,000, and 11,500 fewer addresses with balances greater than $100,000.
Even in the case of the richest, the trend remains unchanged: about 2,000 addresses with a balance of more than $1 million in USD coins have disappeared, as well as another 185 addresses that had more than $10 million.
Although the loss of USDC supply could be attributed to asset purchases birds previous holders and therefore not comparable to actual capital flight, it is undeniable that Tether’s advance must be resolved in some way.
Circle aims to give more power to its resourceswhich, unlike USDT and EURT, are used more in the field DeFi and therefore require greater attention to the areas of efficiency and cyber security.
Furthermore, we must remember that the Circle itself, supported by financial giants such as Goldman Sachs and Black rockis evaluating the hypothesis of one stock exchange listing next year through an IPO.
The value of his company is about 9 billion dollars.