Crypto’s #2 digital dollar stablecoin by volume received a blockchain upgrade last week to support faster transactions by adding a network called Algorand. The US Dollar Coin (USDC) is the symbol of the stablecoin as offered by well-known firms Circle and Coinbase through its joint ‘Centre consortium’ that has a mission of overseeing its governance.
According to the Centre whitepaper, a stablecoin is defined as ‘A term used to describe a crypto asset that is pegged to underlying reserved assets and/or managed by software algorithms in order to enforce price stability’. The increase of the USDC crypto asset has gone from $518 million at the beginning of the year to almost $1.85 billion as of September 10, according to a chart from Coinmetrics.io.
Keli Callaghan, Head Of Marketing at Algorand, pulled no punches in an interview discussing the differences between the Ethereum and Algorand blockchain. Algorand had just been selected by the CENTRE consortium, a governing body over stablecoins that was co-founded by two well-known cryptocurrency firms, Coinbase and Circle.
I asked Callighan if a user would be able to tell the difference if the USDC transactions were conducted on either the Algorand or Ethereum blockchain. Callighan stated, “Your transaction on Algorand will be much faster.”
I reached out to the Ethereum Foundation to offer a chance to respond to Algorand’s claim. Joseph Schweitzer, Communications for the Ethereum Foundation, stated, “While we’re not to be involved at the moment as we continue to focus on research and development at the Foundation, I’d encourage you to pose the question to the Centre Consortium, Circle, Coinbase, or others that are involved here.”
I had asked Jeremy Allaire, CEO and Chairman of Circle, what the difference is between a USDC run on Ethereum vs. Algorand and will it matter to the consumer. Allaire responded, “Algorand brings over 1,000 tps and transaction fees of 1/20th of a cent to the USDC ecosystem, and soon to be released innovations from Algorand offer the potential of scaling throughput by 8-10x on Layer 1, accompanied by new secure smart contracts that complement standard tokens such as USDC.”
Allaire ran the numbers for me in the stablecoin need for speed. “Ethereum supports around 15 transactions per second. Algorand enables over 1000 transactions per second, with work underway to increase that ten-fold in the coming months,” said Allaire.
Circle boasts on its website it is the best platform to run an internet business, using new standards for money powered by USDC— the fastest growing regulated stablecoin. “All told this provides a seamless backend experience that will allow users to use USDC on the Algorand network with peace of mind and the speed and scalability to ensure they won’t get caught up in the sort of slow or delayed transactions that dominate so much of the current digital asset landscape,” said Allaire.
As an ex-regulator with the FDIC, I asked Allaire and wanted to better understand how they are the most regulated, since the stablecoin for Paxos brags about the same thing based on FDIC insurance and holding a trust charter in New York State. Allaire declared, “The Centre Consortium, which oversees USDC governance, standards and protocol, requires issuers of USDC are regulated financial institutions. Circle, as a primary global issuer, is the most licensed firm in the space with approval to operate in jurisdictions across North America, Europe and Asia”.
Multi-Chain Framework and Digital Dollar Stablecoin Interoperability
Allaire had pointed out to me that the ‘Multi-Chain’ framework had been in motion by the Centre consortium for several months. This was important in the timeline of events leading up to the implementation of Algorand, as the Ethereum network has been slower – as well as more expensive – as a result of the new phenomenon described as ‘Decentralized Finance’, or (DeFi).
Allaire expanded on the idea of the Multi-Chain framework, stating, “To support a broad range of use cases, developers and ecosystems, we aim to allow its fiat-denominated digital currency standards to be used across multiple blockchains. By enabling stablecoins built on Centre’s protocols to be available on multiple blockchain ecosystems while still providing underlying interoperability, Centre enables wider adoption and usage of digital dollars built around USDC”.