How xReserve Works

xReserve consists of two main services: an onchain smart contract and an offchain attestation system. Together, these services and related services on the remote blockchain let users deposit USDC on the source blockchain to receive USDC-backed tokens on the remote blockchain. Subsequently, users can burn their USDC-backed tokens to withdraw the USDC held in xReserve.

The following diagram shows how xReserve handles deposits and withdrawals.

These steps occur when a user deposits USDC into xReserve:

1. A user deposits USDC from their wallet app into xReserve smart contract on the source blockchain.
2. The xReserve contract emits a deposit event and locks the funds, holding them in reserve.
3. The xReserve attestation service generates and signs a deposit attestation.
4. The remote blockchain attestation service fetches the signed deposit attestation.
5. The remote blockchain mints USDC-backed tokens on their blockchain and emits a mint event.
6. The remote blockchain token contract deposits the newly minted USDC-backed tokens into the user's wallet app on the remote blockchain.

After completing the deposit process, the user receives an equivalent amount of USDC-backed tokens on the remote blockchain.

Subsequently, these steps occur when a user withdraws USDC from xReserve:

1. A user requests to burn USDC-backed tokens on the remote blockchain and withdraw USDC on the destination blockchain.
2. The remote blockchain token contract burns their USDC-backed tokens on the remote blockchain and emits a burn event.
3. The remote blockchain attestation service generates and signs a burn intent offchain.
4. The remote blockchain attestation service passes the burn intent and signature to xReserve.
5. xReserve verifies the burn and issues a withdrawal attestation.
6. xReserve releases USDC to the user's wallet on the destination blockchain.

After completing the withdrawal process, the user receives USDC on the source blockchain.