With an overwhelming majority vote, the IoTeX community passed Improvement Proposal (IIP) 30 following the Bridged USDC Standard specification from Circle to the IoTeX network via it’s decentralized bridge (ioTube); the current ioUSDC will be migrated to USDC.e.

Bridged USDC Standard provides a secure and standardized method for any EVM blockchain and rollup team to transfer ownership of a bridged USDC token contract to Circle, paving the way for an upgrade to native USDC in the future.

The USDC.e stablecoin will be a core pillar of IoTeX’s DeFi and DePIN ecosystems, centering builders and users around a single stablecoin to avoid liquidity fragmentation. USDC.e will enable DePIN projects to incorporate seamless payments and transfers into their applications, and settle transactions for real world assets to the blockchain like never before.

As highlighted in the proposal linked above, the IoTeX ecosystem had previously implemented a bridged stablecoin, ioUSDC, which will be migrated to USDC.e. So what are the reasons for this migration, and why is the Bridged USDC Standard such an important change for IoTeX and the DePIN ecosystems?

The Need for Stablecoins in the DePIN Sector

Stablecoins play a vital role in the Decentralized Physical Infrastructure Networks (DePIN) sector for several reasons:

1. Transaction Stability: Unlike utility tokens, which can be volatile and are normally used as reward or governance tokens in a DePIN architecture, stablecoins provide a consistent value for settling transactions, simplifying the pricing process. Service providers in DePIN can price their services in stablecoins, ensuring that the cost remains predictable and stable over time.
2. Cross-Chain Interoperability: USDC.e provides interoperability that is beneficial for DePIN projects that span various blockchain ecosystems, allowing for seamless and efficient transactions.
3. Enhanced Trust: USD-backed stablecoins, like USDC.e, are perceived as trustworthy because they are pegged to the US dollar and because of Circle, the well respected and regulated issuer of USDC. This trustworthiness encourages more participants to engage with the DePIN ecosystem, fostering growth and development.
4. Integration with Traditional Finance: Stablecoins bridge the gap between traditional finance and decentralized finance. They enable easier integration of DePIN services with traditional payment systems, attracting a broader user base and facilitating smoother transitions from fiat to crypto.

Implementation Details from IIP-30

The IoTeX Improvement Proposal 30 (IIP-30) outlines the deployment of the Bridged USDC Standard Token (USDC.e) on IoTeX and the migration process from ioUSDC to USDC.e. This includes:

• Smart Contract Deployment: Deploying the USDC.e smart contract as specified by Circle.
• Wrapper Smart Contract: Creating a wrapper smart contract to facilitate conversion between ioUSDC and USDC.e.
• Validator Upgrades: Upgrading ioTube validators to handle new bridge functionality between USDC on Ethereum and USDC.e.
• DeFi Protocol Integration: Encouraging all DeFi protocols on IoTeX to support USDC.e.

Collateralized Stablecoins in the IoTeX Ecosystem

In addition to the USDC.e stablecoin, which has the potential to be upgraded to native USDC in the future, the IoTeX ecosystem has already deployed collateralized stablecoins backed by $IOTX, which are specifically tailored for DePIN. These collateralized stable coins will continue to exist in the IoTeX ecosystem, offering flexible choices for developers and users, such as:

• Diversification: Collateralized stablecoins provide additional options for users who prefer to leverage $IOTX holdings while maintaining stability. This diversification helps in managing financial strategies within the IoTeX ecosystem.
• Innovation: Projects like $WEN, developed by the Magma team, exemplify innovative financial instruments that can support DePIN applications. As the first DePIN stablecoin backed by $IOTX, $WEN demonstrates the potential for creating robust and adaptable financial solutions within the IoTeX network.

Enhancing the IoTeX DeFi  & DePIN Ecosystems

By adopting USDC.e and integrating it into the IoTeX network, the ecosystem will benefit from enhanced compatibility and seamless transactions. The standardized method provided by Circle's Bridged USDC Standard ensures a secure and efficient pathway for potential future upgrades to native USDC issuance.

Source : IoTeX Blog - Aug 14, 2024