The USD Coin (USDC) will be getting a major overhaul related to payment processing in its recently announced upgrade. Centre Consortium—Circle and Coinbase—informed users that USDC 2.0 will provide ‘gasless sends’ as well as upgraded security for smart contracts.
To date, the USDC has required users to hold a balance in Ethereum (ETH) in order to cover the costs of transaction fees (often called ‘gas fees’). These fees had to be paid in ETH, which meant that users had to hold both assets.
The frivolousness of acquiring and holding both coins and the know-how necessary to make such payments has very limited adoption potential. Very few mainstream users would ever consider this option over the multitude of other payment instruments.
The upgraded USDC 2.0 allows users to bypass the gas fees by delegating the payment to a different address. In other words, the gas fees are paid by a third party wallet, allowing the transaction to take place with just the USDC wallet.
The upgrade is being called a ‘gasless send,’ since it allows the user to complete the entire transaction without ETH. However, the gas fees cannot be completely removed because the Ethereum network requires them. The new upgrade simply transfers those fees and then passes them along to the original user via a currency swap.
While the new system cannot eliminate gas fees, it can provide a far more streamlined user experience. The Centre Consortium hopes that this will lower the barrier for entry, and increase adoption of the stablecoin by more traditional users.
The announcement also indicates that USDC 2.0 moves much of the administrative work into on-chain multi-signature processes. This removes the potential for off-chain errors and limits the manual workload for chain administration.
With multi-signature contracts as the functional core, the administrative work is also far more secure than before. Further, the chain allows for greater decentralization of administrative tasks throughout the network.
The new version of USDC was made available on Aug 27, and there is now more than $1.4 billion of USDC currently in circulation.