The life of USDC on the Polygon network
USDC is a very widespread cryptocurrency that can be applied in very different ways. Due to its demand and incredible utility, it was ported to a variety of networks that could benefit from its stability and economic value. In particular, the coin is a popular tool in decentralized finance (DeFi).
If there is a blockchain with extensive DeFi potential and capabilities, USDC is probably used on that network alongside the native token. It was created to work on Ethereum. The token works well with networks that favor scalability, fast transaction speeds, and have a general knack for finance.
USDC Dossier
USD Coin (USDC) is the second-biggest stablecoin on the market and one of the 5 most popular cryptocurrencies overall. It’s second only to Tether USDT, which is a slightly older project created in 2014 for Bitcoin. USDC, by comparison, was released on Ethereum in 2018, and what a great idea it was.
The main benefit of stablecoins is their extreme utility as actual money. While regular cryptocurrencies — be that BTC, ETH, DOGE, SOL, or others — are more like trading assets and research subjects, USDC and USDT have a constant value. You can always know what a USDC is worth — exactly 1 United States dollar.
Without a doubt, the two events that drove DeFi to its current heights were the introduction of Ethereum and the adoption of USDC. The former made DeFi possible by bringing smart contracts into the world, while the latter made it cost-effective by giving it a fully compatible cryptocurrency with the same characteristics as fiat money.
USDC, being a stablecoin native to the Ethereum blockchain, is still the most common way to access decentralized finance. Speaking of it, Polygon enhances the experience even further.
Polygon Explained
Polygon is a Layer 2 extension for the Ethereum blockchain, launched in 2017. It has a number of native characteristics that are built upon the existing parameters and features of Ethereum, which it’s fully compatible with. The reason it was created was to address several issues that ETH started showing by that point.
Polygon can be defined with these several statements:
- Polygon is an additional subchain grafted onto Ethereum that can be connected to at any moment to experience its benefits and extra features.
- Polygon is a proof-of-stake system, which was at the time a massive improvement over Ethereum’s earlier proof-of-work. It’s still a good thing that Polygon was using this consensus for that long.
- Polygon allows developers to construct subchains and task them with processing data, thus relieving the strain on the main network. It also reduces transaction costs by a lot.
- Created with interoperability in mind, Polygon freely communicates with Ethereum and with some other networks, meaning that you can move coins from one to the other effortlessly.
As a result, Polygon is a more scalable network compared to Ethereum, and with fewer performance issues.
Its relationship with Ethereum is of particular note. There are no borders between the two systems. You still need to use the POS Bridge to get your assets from one to the other, but the process is seamless. So, you can use your USDC on Polygon just the same.
Using USDC on Polygon
Polygon doesn’t have its own token standard, like Ethereum or Bitcoin networks. Its native token, MATIC, is the ERC20 token, which means that it’s a currency native to Ethereum. The entire system is just an extension of Ethereum, which is why every coin you find here is also an ERC20.
Conversely, you can use ERC20 tokens on this network just as you would on Ethereum — freely. USDC just so happens to be an ERC20 token. What’s more, it’s one of the most popular currencies of this sort in the world, which is why it’s also commonly found on Polygon. This is not just because of its demand, naturally.
Polygon’s big point of interest is its DeFi capabilities.
DeFi on Polygon
Polygon has a natural inclination towards decentralized finance, decentralized apps, and other such projects. Like its parent chain, smart contracts remain its key feature. Since Polygon is extremely inclined to let people build a scalable experience with their own hands, it naturally attracts a lot of developers.
As such, Polygon is a hotspot for DeFi. It offers extreme scalability, low fees, fast transactions, and a lot of tools to further increase this performance and efficiency. So, if you wanted to optimize your crypto business down to the smallest detail, it can be done very well on Polygon.
USDC complements this environment very well. Since it is stable and predictable, it allows developers to create their projects based on this token without the fear of price fluctuation destroying their reserves. What’s more, if you already own a banking institution or even something less complex like an online store, accepting USDC is just convenient.
Why Use USDC on Polygon
It’s just common sense to keep some USDC on Polygon, but the reasons might be different for different groups of users.
For developers:
USDC represents a stable way of storing value. On the ETH blockchain, coins represent your capabilities for transferring data because your smart contracts all run on gas. The latter is some small amount of native coin necessary to process a transaction. USDC can also be your gas, which means you can process a lot of data by committing small portions of your reserves to it. It would be good if you didn’t have to worry about them changing value all the time.
For customers:
USDC has little potential for price speculations, which means its usefulness as a trading asset is diminished compared to regular currencies — at least for the usual type of trading. Polygon, however, is more about services, like shopping, banking, and so forth. For this reason, USDC is an incredibly useful currency. You can always buy largely the same amount of services with it, just like with real dollars.
