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Circle and Axelar recently announced a partnership that has the potential to revolutionize the entire cryptocurrency industry.
We rarely make bold statements like this, but when Axelar reached out to share the news of this achievement, I was blown away. The issue of cross-chain bridges and their notorious security risks is an issue I have been discussing for months. crypto slate Twitter AMAs and slatecast podcast.
I was shocked to learn that a big step has already been achieved in solving this problem. But Axelar’s involvement with new technology didn’t really shock me.when crypto slate interviewed Axelar at EthCC this year made it clear that the company is one step ahead when it comes to its commitment to cross-chain communication.
A new partnership with Circle brings together Circle’s Cross-Chain Transfer Protocol (CCTP) and Axelar’s General Message Passing technology to enable truly composable cross-chain communication. According to Circle, the benefits for end users are:
With the USDC announcement, we are one step closer to the dream of truly interoperable web3. The only complaint I have is that USDC operates in compliance with OFAC sanctions. In other words, it cannot prevent censorship.
As a UK citizen, OFAC sanctions do not apply to me, but this is inevitable when using USDC. While I do not want to interact with wallets associated with terrorist organizations, I also do not believe Tornado Cash should be subject to international sanctions. Open source code is fair, neutral, and non-political. Therefore, unfortunately, we cannot agree to USDC’s censorship of wallet addresses linked to Tornado Cash.
But would we give up this belief in exchange for the convenience of a fully configurable web3 ecosystem? Such decisions underscore the rise of centralized social media platforms that manage our data online. has become part. Humans are quick to give up weak beliefs in favor of more convenience. I’m not worried about Tornado Cash’s censorship, it’s the precedent. Once Tornado Cash is essentially removed from the Ethereum network, so will all dApps and smart contracts.
Web3 and crypto are essentially permissionless interaction pioneers. However, in my opinion, adding a centralized censorship system to the network weakens its benefits. USDC may be one of the safest stablecoins on the market today, but it is not the most decentralized.
However, regardless of your opinion that Circle censors addresses, there is little argument that utilizing USDC as a routing tool for cross-chain swaps is an incredible advancement. A user is not required to hold his USDC beyond the period required to complete the transaction.
USDC holders will have access to easier and more efficient cross-chain purchases, while those who don’t want to hold USDC can benefit from new cross-chain routing capabilities. Additionally, other benefits such as no slippage and enhanced security are not dependent on the user holding her USDC in the wallet.
If assets held on bridges are transferred across chains, it is a serious problem for the cryptocurrency industry. Losing a bridged token can ruin an entire ecosystem overnight and render it non-functional. With USDC as the routing method for cross-chain swaps, bridged assets are thankfully a thing of the past. The video below showcases cross-chain native USDC swaps using Axelar’s integration technology.
Additionally, the user experience needs to be improved to attract new users to web3. I’ve written about this before, but the ability to swap from one chain to another with a single click is a big step forward. A purist like myself may have reservations about USDC because of the precedent set by the Tornado Cash censorship, but many users wouldn’t worry too much. I have to listen to my own advice. As I said on his Twitter in August, we need to “stop gatekeeping on new people.”
The biggest problem with #web3 poor #UX.
How can I fix this?Stop guarding new people
Focus on users, not technology
Uses a familiar UI Swipe, drag, tap
Don’t hand over the entire kitchen sink to new users
Advanced education with modular features, not FAQsAkiba.lens (@akibablade) August 4, 2022
If Axelar partners with other stablecoins such as Tether, DAI, Pax Dollar and Binance USD, we will be more excited about the state of web3. In a world where users can choose fully interoperable stablecoins for their dollar, I would be incredibly bullish.
Speaking to Axelar, integrations with other stablecoins may be possible, but no details have been announced about other partnerships. For now, USDC composability has already opened many new doors for both crypto adoption and usability. We look forward to exchanging his USDT on Ethereum for his BNB or AVAX without the need for complicated cross-chain bridges. One-click swap will definitely improve his UX of web3 and attract more people to this space.
Finally, USDC’s new composability will also allow users to purchase NFTs on another chain without having to hold the native token of the chain the NFT was created on. If you have a Phantom wallet and want to buy her NFTs with Ethereum, you can now do so using her SOL in your Phantom wallet. SOL is converted to USDC on Solana, then routed to Ethereum and exchanged to ETH. When NFTs are purchased, they are bridged through Axelar and created on the Phantom Wallet’s Solana blockchain. If you want to transfer the NFT to your Ethereum wallet, his Solana-based NFT will be burned to unlock the original NFT.
Cross-chain NFTs still need to be held on bridges, but the UX of purchases is definitely better as buyers don’t need to touch ETH to get NFTs. Cross-chain NFTs without the need to keep the original NFT on the bridge are not possible due to their irreplaceable nature, but this is a huge step forward in terms of UX.
Ultimately, the partnership between Axelar and Circle is great for the crypto industry as a whole. This could be one of the most important innovations to come out of this bear market. There is no doubt that the coming months will improve the user experience in DeFi, GameFi and almost every other area of web3 as a result of this achievement.
