USD Coin, or USDC for short, is a stablecoin created by a group of companies called Centre, and now brought to you by Luno.
It’s a digital stablecoin pegged to the United States dollar, which means that USDC can always be redeemed for dollars. Each USDC is backed by a single dollar, held in reserve, and with a market cap of $2.5 billion, it’s regarded as one of the fastest-growing, fully reserved digital dollar stablecoins.
A little bit more detail
USDC was launched in September 2018 as a collaborative effort between Circle and Coinbase. It’s governed by Centre, who sets technical, policy and financial standards for stablecoins.
USDC tokenises US dollars and puts them on the Ethereum blockchain as an ERC-20 token. This allows for the smooth movement of money anywhere around the world within minutes, and also serves to provide stability in a market known for its relative volatility.
In addition to this, USDC opens up new opportunities for trading, lending, risk-hedging and more, similar to other stablecoins.
While USDC is pegged to the US dollar, it can trade at a premium, or at a discount, depending on demand for it. The price of USDC is based on supply and demand. For example, it could trade at slightly higher than 1 USD, because it’s more liquid and more easily transferable than ordinary dollars - if there’s a sufficiently high demand for it.