Native USDC

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Native USDC will be available on Arbitrum from June 8, and it is proposed to incorporate it into GLP at or near launch.

Native USDC vs.USDC.e (bridged from Ethereum):

  • issued and redeemable for fiat from Arbitrum directly using Circle and Coinbase.

  • CCTP standard allows direct bridging between chains with native USDC, without slippage or additional bridge risk as it is officially supported by USDC.

  • Does not rely on the Arbitrum bridge and associated 7-day wait for withdrawals.

As the largest holder of USDC (~$200m) early adoption will help minimize fragmentation and ensure a rapid adoption of native USDC within the ecosystem, and provide support for one of the first initiatives undertaken by the Arbitrum Foundation.

Preparations have been made, and contributors are ready to deploy the following:

  1. Incorporation of native USDC at its launch into Arbitrum GLP as a stablecoin.

  2. Reducing USDC.e within GLP as soon as practically possible but maintaining a small residual presence (as was done during the Avalanche migration to native USDC.)

  3. Securing incentives for the adoption of USDC within the protocol, including V2.

This proposal will only go to additional onchain voting snapshot voting if a broad consensus of support doesn’t emerge here at gov.gmx.io

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I’m generally in favour of using native assets rather than bridged assets in the GMX protocol. Helps minimize dependencies and attack vectors. Don’t see any meaningful downside either. But as you say, good to keep a residual 1 or 2% USDC.e to benefit from swap volumes etc.

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What is the process of moving from bridged to native assets? I just want to make sure from a safety and code perspective the protocal is safe. Other then that native would be best!

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The process would likely be to add native USDC to GLP, with a target weight close to that of the current usdc.e. And keep usdc.e in GLP with a target weight of just a few % points. That would stimulate the market to adjust the balances accordingly.

Rest assured that protocol and LP security will be top of mind for the contributors during this process.

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As part of Gauntlet’s work with the Arbitrum Foundation to mitigate risk for the ecosystem while users transition from bridged USDC.e to Native USDC, Gauntlet has proposed adjustments to the GMX V1 pool. The adjustments covered in the report can be seen below:

  • USDC.e Target Allocation 30.0% —> 27.5%
  • USDC Target Allocation 3.0% —> 5.5%

Beyond initializing the transition away from USDC.e in the GMX V1 pool, these updates have a secondary effect of providing vital data on liquidity provider behavior that will inform further recommendations made throughout the USDC migration process.

You can read our full analysis here: Gauntlet's USDC.e Initial Migration Report - #5 by gauntlet - General - Arbitrum

Next Steps

  • We welcome community feedback
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Sounds good, to move to more native USDC step by step.

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Wanted to thank Gauntlet and the Arbitrum Foundation for working to get these recommendations out and helping all protocols to prioritize a migration to native USDC.

We believe a quick migration is valuable as it reduces fragmented liquidity and will help GMX V2 adoption since most pools have been seeded with native USDC and all protocols builing on V2 would also adopt the same standard IF there is deep liquidity on-chain for native USDC.

Prior resolutions also provide contributors the ability to adjust specific stablecoin weights, so no further voting is needed to implement these changes.

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