Stablecoins, USDC/USDC.e (part 2/2)

Oh Finance
4 min readSep 30, 2021


Native tokens on a blockchain

Crypto is fragmented by nature, there exists different networks (= blockchains) where coins and tokens reside natively. The reason why there are different blockchains is because a new blockchain emerges to typically solve limits/constraints on the existing ones: Like scalability, transaction volume per second, finality speed. Some other blockchains have been created for specific use cases outside of these common considerations.

Example of blockchains:

  • Bitcoin is its own blockchain and BTC is its native coin, launched in 2009.
  • Ethereum is another blockchain, launched in 2015, one of the most popular one with thousands of tokens/coins native on it (ETH amongst them).
  • Avalanche: New kid on the block, extremely promising for DeFi applications, launched in 2020. Oh! Finance is launching on that chain.
  • And many others (Polygon, Binance Smart Chain, Moonriver, etc).

A crypto project choses to launch typically on a specific blockchain and its token or coin is then tied to it and lives in that environment. It can’t seamlessly move from one blockchain to another.

In the specific case of stablecoins, they usually started on one blockchain and then expanded to others:

  • USDT: Emitted first on the Bitcoin blockchain, then expanded to Ethereum, EOS, Tron, Algorand, SLP and OMG. They have been announced to be native to Avalanche in the future.
  • USDC: Emitted first on Ethereum, then expanded to Stellar, Algorand, Tron, Solana, Hedera Hashgraph. They have also been announced to be native to Avalanche in the future.

Bridged/wrapped stablecoins (“USDC”/”USDC.e”)

In the case of USDC, it’s emitted natively on Ethereum: It’s like the US dollar in the United States. If another country, say “El Pais”, wants to use the US dollar, there are two options:

  • “El Pais”” decides to accept the US dollar as one of its official currencies. So US dollar banknotes and coins can be used to buy items, just like its native currency “El Pais Pesos”.
  • “El Pais”” decides to transfer US dollars from the United States, but instead of accepting US dollar banknotes and coins in its market, it uses the “imported” US dollar as reserve and prints its own version of the US dollar pegged 1:1 to the US dollar. And calls that currency “USD Pesos”, that its inhabitants can use to trade goods. In crypto terminology, the “USD Pesos” would be called a bridged or wrapped version of the original US dollar.

In crypto space, the United States would represent the blockchain “Ethereum” and “El Pais” would represent another blockchain, like Avalanche. USDC doesn’t yet exist natively on Avalanche, so it has to be imported: It’s possible to transfer USDC from Ethereum to Avalanche via a so-called “bridge”. There are different crypto projects offering bridging of crypto assets from Ethereum to Avalanche. Each of these bridges creates their own version of USDC on Avalanche and are not compatible with each other. Some crypto projects offer a 1:1 exchange service between these versions.

On Avalanche, there is an official bridge backed by an Avalanche foundation, called the Avalanche bridge (“AB”). All the tokens from Ethereum transferred by this bridge to Avalanche end up as a wrapped version on Avalanche of their Ethereum counterpart. The bridged token names on Avalanche are the same as Ethereum, but with a “.e” extension. In the case of USDC, it’s named “USDC.e” on Avalanche. The value of “USDC.e” is pegged 1:1 to the value of “USDC”. Oh! Finance has opted to support that wrapped version of USDC on Avalanche.

Who transfers USDC from Ethereum to Avalanche?

In the case of a real country, like our imaginary “El Pais”, it would most likely be managed by a central bank under control of the government. But crypto is decentralized: Anyone can bridge USDC.

Avalanche is currently one of the most promising blockchains for decentralized finance (and for other use cases undoubtedly) and has launched a $180 Million liquidity mining incentive for projects launching on its network. Big DeFi names are moving over to Avalanche (lending platforms, like Aave and Curve for example), as well as countless others, besides its many burgeoning native projects which are already enjoying a big boost from this initiative.

Avalanche is attracting a huge amount of capital and that’s only the start, and offers many investment opportunities. So all the users coming from big projects on Ethereum for example are transferring assets to Avalanche, like USDC amongst them. Likewise, investors looking for opportunities, liquidity providers, etc.

What will happen when USDC will be emitted natively on Avalanche?

The token name will likely be “USDC” and there will be 2 versions of USDC: “USDC” and “USDC.e”. DEXs and other specialized projects will provide a 1:1 conversation ratio between these two versions of USDC, so no loss of value.

Oh! Finance will also support the native USDC on Avalanche once it’s available.

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