Axelar Bridged USDC (AXLUSDC)

What is Axelar Bridged USDC (AXLUSDC)?

Axelar Bridged USDC (AXLUSDC) is a wrapped version of the popular stablecoin USD Coin (USDC), designed to function seamlessly across multiple blockchain networks. USDC, issued by Circle, is a digital currency pegged 1:1 to the US dollar, making it a stable and reliable medium of exchange. AXLUSDC extends the utility of USDC by enabling its transfer and use on blockchains other than Ethereum, where USDC is natively issued. This cross-chain functionality is achieved through the Axelar network, which acts as a bridge, securely wrapping USDC on Ethereum and minting an equivalent amount of AXLUSDC on the destination chain. This allows users to leverage the stability and familiarity of USDC within diverse blockchain ecosystems, fostering interoperability and expanding the possibilities for decentralized finance (DeFi) applications. Essentially, AXLUSDC brings the stability of the dollar to different blockchain ecosystems by moving USDC to a different blockchain.

How Does Axelar Bridged USDC Work?

The functionality of AXLUSDC hinges on the Axelar network’s bridging mechanism. When a user wants to transfer USDC from Ethereum to another chain as AXLUSDC, they deposit their USDC into an Axelar Gateway on Ethereum. This gateway acts as a secure vault, locking the USDC. The Axelar network, secured by a dynamic validator set running delegated Proof-of-Stake, then verifies the deposit. Through multi-party cryptography, the validators collectively authorize the minting of an equivalent amount of AXLUSDC on the destination chain. It’s crucial to note that for every AXLUSDC in circulation, there is a corresponding USDC locked in the Axelar Gateway on Ethereum, ensuring a 1:1 peg. Once AXLUSDC is minted on the destination chain, it can then flow freely between chains supported by the Axelar network without needing to return to Ethereum, improving its efficiency.

Axelar Bridged USDC Key Features and Technology

Axelar Bridged USDC (AXLUSDC) incorporates several key features enabled by underlying technology which make it a valuable asset in the cryptocurrency space. A critical component is its bridge technology, which depends on cross-chain transfers. Using Axelar’s infrastructure, AXLUSDC is minted on supported blockchains after the user deposits USDC into a gateway smart contract on Ethereum, and verified by the network validators. This method eliminates the need for centralized exchanges or intermediaries, offering a more trustless system.

Because AXLUSDC utilizes the Axelar network, its security is maintained by a delegated Proof-of-Stake (dPoS) consensus mechanism. This system incentivizes network participants to validate transactions and secure the network. dPoS is energy efficient, and it also reduces the likelihood of malicious attacks by decentralizing control across a network of validators, enhancing the network’s resilience.

What is Axelar Bridged USDC Used For?

AXLUSDC expands the utility of USDC by facilitating its use in a wider range of DeFi applications across multiple blockchain ecosystems. Because AXLUSDC can flow between different blockchains, users can access DeFi protocols on other blockchain platforms. AXLUSDC also enhances cross-chain trading. AXLUSDC can also be used as collateral in decentralized lending and borrowing platforms, regardless of the underlying blockchain. This increases liquidity for those platforms and provides borrowers with a wider range of options. AXLUSDC can also be used for payments. Merchants and service providers can accept AXLUSDC on various blockchain networks, streamlining cross-border transactions and reducing transaction fees.

How Do You Buy Axelar Bridged USDC?

Acquiring AXLUSDC generally involves using decentralized exchanges (DEXs) or cross-chain bridges.

* **Decentralized Exchanges (DEXs):** Many DEXs that operate on chains supported by Axelar offer trading pairs involving AXLUSDC. Users can swap other cryptocurrencies, such as native tokens of the respective chains or other stablecoins, for AXLUSDC on these platforms. Examples include Uniswap, PancakeSwap, and Trader Joe, depending on the chain.

* **Cross-Chain Bridges:** Platforms such as Squid and Satellite are specifically designed to facilitate cross-chain swaps, including the conversion of USDC on Ethereum to AXLUSDC on other chains. Users deposit USDC on Ethereum through the bridge, and the equivalent amount of AXLUSDC (minus any fees) is minted on the destination chain.

The process generally involves connecting a Web3 wallet (like MetaMask, Trust Wallet, or Coinbase Wallet) to the chosen platform, selecting the desired trading pair or conversion, and confirming the transaction. It’s important to research and use reputable platforms with sufficient liquidity to ensure a smooth and secure transaction.

How Do You Store Axelar Bridged USDC?

Storing AXLUSDC is similar to storing any other cryptocurrency, but the specific wallet compatibility depends on the blockchain network on which the AXLUSDC resides. Given that AXLUSDC exists on multiple chains, it is crucial to choose a wallet that supports the specific network where you hold your AXLUSDC. Here’s a breakdown of common wallet types:

* **Software Wallets (Hot Wallets):** These are applications installed on your computer or smartphone. They offer convenient access to your AXLUSDC but are generally considered less secure than hardware wallets. Examples include:

* **MetaMask:** A popular browser extension and mobile wallet that supports multiple EVM-compatible chains where AXLUSDC may be deployed.
* **Trust Wallet:** A mobile wallet that supports a wide range of blockchains and tokens, including AXLUSDC on various networks.
* **Coinbase Wallet:** A user-friendly mobile wallet from Coinbase that supports multiple cryptocurrencies and blockchains.
* **Hardware Wallets (Cold Wallets):** These are physical devices that store your private keys offline, providing a higher level of security against hacking and online threats. Examples include:

* **Ledger:** A popular hardware wallet that supports a wide range of cryptocurrencies and blockchains, including those on which AXLUSDC may be available.
* **Trezor:** Another well-regarded hardware wallet with similar functionality to Ledger, providing secure offline storage for AXLUSDC.

When choosing a wallet, prioritize security, ease of use, and compatibility with the specific blockchain network where your AXLUSDC is located.

Future Outlook and Analysis for Axelar Bridged USDC

The future outlook for AXLUSDC is closely tied to the growth and adoption of cross-chain technology and the broader DeFi ecosystem. As more blockchain networks emerge and users seek to seamlessly interact with various DeFi protocols, the demand for assets like AXLUSDC, which facilitate interoperability, is expected to increase. Axelar’s role in providing a secure and reliable cross-chain communication layer positions AXLUSDC as a potentially important bridge asset. The future success of AXLUSDC will depend on maintaining security, expanding network support, and fostering partnerships with DeFi protocols across different chains.

References

• CoinGecko
• CoinDesk
• Axelar Network