Cryptocurrency firm Circle has announced plans to launch a new API for businesses using Circle accounts to manage crypto assets – and in particular USDC stablecoins. The new API will allow businesses to access decentralized finance protocols (DeFi) starting with compound loan pools.
Circle is best known as one of the founding members of the Center consortium along with Coinbase. Along with other crypto partners, they issued USD Coin (USDC), a popular stablecoin.
As the name suggests, stablecoins are fixed-price cryptocurrencies. A USDC is always worth a USD. Auditing firms regularly verify that issuers still keep as much USD in bank accounts as USDDC in circulation.
The idea behind USDC is that you can handle the money more easily. According to USDC backers, transferring money from one person to another should be as easy as sending bitcoin from one wallet to another. Circle has its own solution with Circle accounts. Account holders can send, receive, and hold USDC programmatically using standard API calls.
In particular, Circle has built ramps to bridge the gap between fiat currencies and cryptocurrencies. With Payments, you can accept card payments, bank transfers, and USDC transactions. Everything arrives in your Circle account as USDC. Likewise with payments, you can send bank transfers from your Circle account.
Now Circle also wants to help you access more features with your USDC currently in your Circle account. With the upcoming DeFi API, you will be able to access DeFi protocols without having to manually send USDC tokens to another wallet. Circle will start with the Compound protocol.
Compound manages crypto-based lending markets. Some users provide crypto assets and contribute to cash pools. Others borrow crypto assets – they must first provide another type of crypto as collateral.
Users who lend money on Compound are rewarded with interest rates. For example, when you provide USDC using the Compound protocol, you get 1.74% Annual Percentage Return (APY). Since USDC is a popular guarantee for the Compound protocol, it makes sense that Circle would adopt the protocol with its business accounts. It’s a great addition to Circle’s treasury infrastructure.