Circle, issuer of the world's second-largest stablecoin USDC, unveiled a protocol update on Tuesday it says will reduce cross-chain settlement time from several minutes to a matter of seconds.
The company's newly launched Cross-Chain Transfer Protocol V2, or CCTP V2, will improve upon CCTP V1 "with a new set of smart contracts and APIs," slashing cross-chain transaction settlement time from "an average of 13 to 19 minutes for a typical blockchain transaction" between Ethereum and Layer 2 blockchains to only seconds, according to a statement.
"CCTP V2 reduces the barriers that have hindered the fluid movement of digital dollars between supported blockchains," said Nikhil Chandhok, chief product officer of Circle, in the statement. "CCTP V2 gives developers greater flexibility to tailor cross-chain transactions to their specific needs and unlocks low-latency use cases in crypto capital markets, effectively abstracting away cross-chain complexities for developers and their users."
As the USD-pegged stablecoin market, by most accounts, is poised to keep growing, improving transaction time could prove beneficial to Circle as competition potentially heats up in the coming months and years. Out of the roughly $235 billion worth of USD stablecoins in circulation, Circle's USDC accounts for $58 billion, according to The Block Data Dashboard. USDC ranks a distant second to Tether's USDT, the clear market leader.
Avalanche, Base and Ethereum to begin with
Circle said CCTP V2 will initially be available for developers working on Avalanche, Base and Ethereum, but the plan is to add support for more blockchains as the year progresses. "CCTP V1 will remain available on 11 blockchains," Circle said, adding that since launched in 2023, "CCTP has facilitated more than $36 billion in transaction volume."
Some of CCTP V2's new features Circle highlighted on Tuesday include "Hooks," which it said makes it possible for developers "to automate post-transfer actions on the destination blockchain."
