Cardano promotes stablecoin USDCx, aiming for direct withdrawals without bridges

Input Output Group (IOG) – the main development entity of the Cardano ecosystem – has clarified the motivation behind its recent stablecoin expansion strategy on this network.

According to IOG, the new infrastructure called USDCx is designed as a native asset on Cardano, backed 1:1 by USD Coin stored in Circle’s xReserve smart contract.

Earlier in February, IOG partnered with Circle to deploy the technical infrastructure for USDCx on Cardano. This integration helps bring USD-pegged stablecoin liquidity into the Cardano ecosystem and connects the network with Circle’s xReserve infrastructure.

Through USDCx, users can participate in various DeFi activities such as providing liquidity, lending and borrowing, payments, and real-world asset (RWA) settlements.

How USDCx Works

Users can use the USDCx bridge application to:

• Deposit USDC into the xReserve smart contract on Ethereum and mint the corresponding amount of USDCx on Cardano
• Burn USDCx on Cardano to withdraw USDC on Ethereum
• Deposit USDC and automatically swap part of it for native assets on Cardano via DEX, currently supported by Minswap
• Deposit or withdraw USDC directly from centralized exchanges to a Cardano wallet as USDCx without needing to operate on Ethereum

Goal: Direct withdrawals without relying on bridges

After the USDCx infrastructure was announced, some in the crypto community criticized the use of bridging mechanisms. However, IOG emphasized that their initial goal was not to create a bridge.

According to IOG, the main objective is to enable users to withdraw USDC directly to Cardano. The xReserve smart contract essentially functions as a mechanism used by centralized exchanges to move USDC across blockchains without complex wrapped tokens or bridge interfaces.

IOG stresses that USDCx is not a short-term initiative but an upgrade at the financial infrastructure level of Cardano. This could open up opportunities for liquidity expansion and foster ecosystem growth as adoption increases in the future.