What happened
Tokens for the Avalanche (AVAX 1.64%) blockchain network are skyrocketing on Thursday afternoon, posting a 24-hour gain of 25.4% at 3:30 p.m. ET. The jump started when financial-technology company Circle said that the USD Coin (USDC +0.00%) now is available on the Avalanche network, giving the smart contracts blockchain access to an unprecedented amount of liquidity.
So what
Avalanche is the tenth-largest cryptocurrency by market value, clocking in at $25.2 billion today. USD Coin is even larger, with a $41.7 billion market cap, making it the seventh-largest digital currency (and the second-largest stablecoin). The integration of a well-respected stablecoin will reduce transaction fees on the Avalanche network, which previously relied on Ethereum (ETH 1.24%) transactions to settle fees. Ethereum's transactions are notoriously costly and slow, so the USD Coin alternative is a major upgrade.
Image source: Getty Images.
Now what
This announcement is a game changer for Avalanche but just another feather in the cap for the USD Coin project. Avalanche is the seventh blockchain to integrate this coin as an alternative fee settlement mechanism, and the partner list reads like a who's-who of the smart contract blockchain market. USD Coin didn't move on the news, as behooves a stablecoin whose value is directly tied to the U.S. dollar. However, the deal did boost the market value of the company behind the USD Coin system.
USD Coin's robust partner list sets blockchain manager Circle up for a high-stakes initial public offering in the near future. The company signed a deal with special purpose acquisition company (SPAC) Concord Acquisition (CND +0.00%) in July, aiming to enter the American stock market under the new ticker symbol CRCL before long. Growth investor Cathie Wood's ARK Investment Management served as an advisor on this deal, which sketched out an initial enterprise value of roughly $4.5 billion. We don't have a firm date for the closing of Circle's SPAC transaction yet.
USD Coin is Circle's main business asset, so what's good for the stablecoin should be good for its manager. Concord Acquisition's stock turned a 1.7% price drop into a 2.3% gain on the Avalanche partnership news.
