Circle CEO Jeremy Allaire disclosed that a native version of the USDC stablecoin will be launched on Coinbase’s Layer 2 network Base next week.
— Jeremy Allaire (@jerallaire) August 29, 2023
As liquidity grows over time, Circle expects that the stablecoin will replace the currently circulating bridged USD Base Coin (USDbC) that gets its liquidity from Ethereum. Many users of the Base network rely on USDbC as a substitute for USDC when transacting on Base.
“Base will work with ecosystem apps to provide an optional smooth transition of liquidity from USDbC to USDC over time. There will be no immediate changes to Base Bridge and it will continue to operate normally,” said Circle in an accompanying blog post.
The benefits of bringing native USDC to Base will mean that the stablecoin will be fully backed by reserves and redeemable 1:1 against the U.S. dollar, while also enabling easier on and off-ramps for institutions.
The news comes roughly a week after Circle and Coinbase announced a reorganization of their partnership with respect to USDC, which involved a disbanding of the Centre Consortium that had managed the stablecoin’s governance since 2018. Circle has now assumed full control of USDC issuance and governance, but the two companies will equally share interest income from the broader distribution and use of the stablecoin.
Coinbase also announced that it would be taking an equity stake in Circle as part of a plan to further align the economic and strategic incentives between the two entities.