In a recent discussion, Walker Mayerchak, Circle’s Software Engineer, shed light on the innovative Cross Chain Transfer Protocol (CCTP) developed by Circle. This protocol serves as a vital liquidity layer for cross-chain applications seeking USDC accessibility.
Mayerchak emphasized that CCTP paves the way for seamless fund transfers across various blockchains, such as Ethereum, Avalanche, and Arbitrum.
Operating through a three-step process, the protocol ensures a smooth transition. The initial step involves the burning of USDC. Users can trigger this process by calling a smart contract on the source chain, allowing them to burn a specified amount of USDC.
Following that, Circle’s API diligently monitors events on the source chain and issues an attestation once the burning process is successfully completed. This attestation acts as evidence that then gets presented to the destination chain.
Ultimately, this attestation enables users to proceed with the minting process on the destination chain, resulting in the acquisition of native USDC tokens. These tokens hold the potential to be redeemed for real dollars from a bank account, offering users tangible value.
Dealing with honeypot
He noted that the motivation behind developing CCTP was to address the limitations and risks associated with existing bridge solutions.
Traditional lock-and-mint bridges create honeypot risks, as they produce wrapped tokens that may become worthless if the source chain’s contract gets hacked.
In contrast, CCTP only exposes users to risk during the bridging period, as they receive native USDC that can be redeemed for real dollars.
Moreover, existing bridges also suffer from liquidity fragmentation and require collateral from liquidity providers, leading to higher fees for users. CCTP overcomes these challenges by not requiring collateral, and it provides a unified liquidity layer for cross-chain applications.
The speaker said that CCTP offers several design principles, including native USDC support everywhere, faster bridging times than some other bridges, interoperability with different chains (including non-EVM chains like Solana), and extensibility for various use cases.
Some potential use cases for CCTP include building fast liquidity-based bridges, gasless token bridging with provided UX, and acting as a relayer on both chains. Developers can create custom contracts that interact with CCTP to facilitate these use cases.
As for integrating additional blockchains into CCTP, adding support for EVM-based chains is straightforward, while non-EVM chains require more effort due to security concerns and the need for audits, according to Walker.
