How Stablecoin USDC Plans to Reduce Transaction Fees by 7%
Stablecoin issuer Circle has announced an upgrade to reduce transaction fees by approximately 7%.
This v2.2 upgrade, involving USDC and its euro counterpart EURC, significantly enhances transaction efficiency on Ethereum Virtual Machine (EVM) blockchains.
New USDC and EURC Features
The upgrade, which builds on the momentum of USDC’s expansion, includes six key changes. Notably, it will enable signature validation from smart contract wallets by adopting EIP-1271.
This feature will allow transfers from smart contract wallets in addition to private key wallets, enhancing support for account abstraction. It is a significant move for mainstream user experiences in the EVM ecosystem, allowing users to pay network gas fees in USDC and EURC.
“USDC is becoming more efficient, with a new v2.2 upgrade (users don’t have to do anything), which will reduce gas costs for every transaction, improve support for using USDC with account abstraction, and bolster security on EVM chains,” Circle CEO Jeremy Allaire said.
Read more: What Is a Stablecoin? A Beginner’s Guide
Moreover, the upgrade optimizes the blocklist check process in USDC and EURC smart contracts. It aims for a more efficient lookup process and substantially reduces network gas fees for various functions.
Cost reductions are estimated to range between 6% and 7% for common functions like transfers, payments, or trades.
Circle Enhances Stablecoin Security
The upgrade also introduces measures to improve resilience against forks of EVM blockchains. A new change in the smart contracts will allow for dynamic inference of the official chainID. Therefore protecting users from potential misuse of funds on unofficial forks.
Another notable change is the removal of blocklist checks from functions that do not move funds. This change will result in a further reduction of network gas fees when using USDC and EURC. The estimated gas savings are around 7.34% for approvals and about 3.5% for increase and decrease allowance functions.
The v2.2 upgrade is fully backward-compatible and requires no action from developers or users. The phased rollout begins on the Avalanche Fuji testnet, with plans to complete the upgrade across various blockchains over the next few months.
The Ethereum mainnet and other key platforms will see the implementation of this upgrade in January 2024.
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