Introduction and Objectives
The amount of stablecoins on a blockchain or a protocol is quickly becoming the most important valuation metric. Getting $Bone on Shibarium is critically important, but so is getting stable coins on it. It is no coincidence that the most successful blockchains also have the most stablecoins on them.
Implementing Circle’s Cross-Chain Transfer Protocl (CCTP) into the K9 application will be of tremendous benefit to K9 and the Shibarium blockchain. [Cross-Chain Transfer Protocol (CCTP) | Circle]
CCTP is Circle’s innovative way of helping to onboard USDC unto chains and protocols. Circle is the issuer of the stable coin USDC. Cross-Chain Transfer Protocol (CCTP) enables USDC to flow securely between blockchains. It is permissionless on-chain utility that facilitates USDC transfers securely between blockchains via native burning and minting. USDC is a fully regulated dollar digital stablecoin launched by Circle and Coinbase. USDC is fully backed by cash and short-dated U.S. government obligations, so that it is always redeemable 1:1 for U.S. dollars.
CCTP helps solve the capital-intensive activity of onboarding USDC into protocols by making this possible without creating a liquidity pool and tying up protocol funds.
CCTP is already live on 8 chains. Let’s make Shibarium the 9th. CCTP is available on Arbitrum, Avalanche, Base, Ethereum, Noble, OP Mainnet, Polygon PoS, and Solana.
CCTP will enable users of the K9 app to swap their digital assets from other chains including L2s to Shibarium in a completely automated way.
There are numerous benefits of implementing CCTP. I encourage you to review their website for detailed information. CCTP allows users to enjoy transfers that feel chain agnostic. The pair is always 1 to 1 and there is zero slippage.
CCTP tackles liquidity fragmentation issues and addresses user experience issues caused by unofficial, bridged forms of USDC. This means traders can engage in cross-chain trading activities in a more secure and capital-efficient way.
How this will potentially work.
- A user on the K9 app will initiate a transfer from a supported source chain such as Eth, Base or Solana by specifying the USDC amount.
- K9 will activate the burning of USDC on the specified chain.
- Circle detects the burn event and allows the same amount of USDC to be minted on Shibarium.
- The newly minted USDC can be transferred into the user’s wallet or into the K9 protocol as designed by the developers.
- CCTP allows instructions to be coded into the transfer function enabling developers to design a great user interface and experience. Developers get to determine how many steps the transfer process takes.
Benefits to K9 Finance Community
The benefits to the K9 finance community are numerous:
- It allows the bridging of USDC to Shibarium from 8 chains. This USDC can then be used to create liquidity pairs with K9Bone and other ecosystem tokens. In fact, in one click USDC can be transferred from supported chains and swapped for K9Bone and other tokens on Shibarium or even deposit into LP pairs.
- It allows a lending/borrowing utility to be integrated into the K9 app. If a substantial amount of USDC is deposited into the protocol via CCTP it allows USDC to be loaned out. Depositors earn an interest which encourages them to move their funds to Shibarium from other chains. K9 could also profit from interest charged to borrowers.
- It allows K9 to offer users the ability to claim their rewards in USDC. This will be a very attractive option to users. It allows them to lock in their profits and keep it on chain. K9Bone could even be accepted as collateral.
- Forward-looking, every perpetual protocol relies on stable coins to function. By implementing CCTP and onboarding USDC K9 prepares itself to launch a perpetual protocol soon.
- This allows K9 to capture users with assets on other chains such as Arbitrum, Base, Ethereum and Solana.
- A vanity benefit is that Shibarium gets listed on Circles’ website as a supported chain and K9 as a supported protocol. This is potentially appealing to investors and users as it provides further legitimacy and advertisement.
- CCTP doesn’t require pooled USDC liquidity to perform cross-chain transfers, increasing capital efficiency and avoiding fees charged by liquidity providers.
Proposal Details
What:
CCTP is a permissionless on-chain utility that enables the flow of USDC across chains through native burning and minting. With CCTP, USDC is effectively teleported from one blockchain to another. CCTP serves as permissionless infrastructure for developers to build on top of, or integrate into, their existing apps, wallets, and bridges.
Who:
CCTP was developed by Circle. Circle is the issuer of USDC. According to recent reports USDC has surpassed Tether [USDT] in stablecoin transactions. According to Visa’s on-chain analytics, USDC recorded 166.6 million transactions in April 2024, outpacing USDT’s 163.6 million transactions. USDC is also gaining favorability among regulators.
K9 Finance in collaboration with Shibarium developers are to consider implementing CCTP.
Where:
The user interface will be built into the K9 application and possibly the Shibarium or Shibaswap frontend.
When:
Ideally it would be great if this could launch with the K9 app launch. Since the K9 app is currently being built, now will be a good time for the devs to explore the feasibility. Devs can contact Circle to discuss requirements and come up with a practical timeline. It could be rolled out in future updates.
How:
Circle already has several partner SDKs powered by CCTP which developers can leverage to build faster and to access additional functionality. Perhaps one of these could be useful. This proposal is a technical one that requires the development of an application or software. Hence, it will require the protocols developers to contact Circle to discuss the feasibility.
How it works
USDC is burned on the source chain: Using an app, a user initiates a transfer of USDC from one blockchain to another and specifies the recipient wallet address on the destination chain. The app facilitates a burn of the specified amount of USDC on the source chain.
A signed attestation is fetched from Circle: Circle observes and attests to the burn event on the source chain. The app requests the attestation from Circle, which provides authorization to mint the specified amount of USDC on the destination chain.
USDC is minted on the destination chain: The app uses the attestation to trigger the minting of USDC. The specified amount of USDC is minted on the destination chain and sent to the recipient wallet address.
Developer docs can be found at Cross-Chain Transfer Protocol
Impact Assessment
The impact of onboarding a substantial amount of USDC unto Shibarium cannot be overstated. In fact, many in the community have been asking for stablecoin liquidity. The amount of stablecoins locked on a chain or in a protocol serves as its potential floor. Since all other non-stablecoins and tokens fluctuate in value the TVL of a chain or protocol could diminish significantly during a market correction or in a bear market. Stablecoins retain their value. It allows users to keep funds on chain even in a bear market.
Users are reluctant to spend or trade assets they expect will appreciate in value. This is noticeable in the low use of $Bone on Shibarium. While k9bone will unlock a significant amount of $Bone for use on Shibarium a significant amount of these will be staked or locked in pools. The ability to transfer a significant amount of USDC to Shibarium at very low cost will greatly benefit the K9 protocol and the entire chain. It will greatly increase transactions on chain. NFT projects and meme tokens will benefit significantly if users could trade for them with USDC while keeping their ecosystem tokens staked or in LPs.
Stablecoin LPs are very popular. This will allow USDC LP pairs with all ecosystem tokens. This could even be implemented with a zap feature to transfer USDC directly from other chains into LPs on Shibarium.
By allowing the possibility for users redeem their rewards and to lock in their profits in USDC and on chain it reduces the flight of capital.
Implementing CCTP could allow for the capture of users from 8 chains. A marketing event could be built around its implementation by offering free transfers of USDC from supported L2s to Shibarium. Due to the low fees on L2s, including Shibarium, K9 could offer free transfers of USDC to Shibarium indefinitely, or for a limited time post launch to create urgency. A portion of the already approved marketing budget could fund millions of transfers. This includes fees on the source chain as well as Shibarium.
Very importantly, K9 could profit substantially from making loans and charging interest.
Thank you for reading and considering this proposal. I am glad there is this opportunity to contribute. I wish the very best for Shibarium and for K9 Finance.
For detailed information on CCTP please visit: Cross-Chain Transfer Protocol (CCTP) | Circle