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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 stablecoins on the remote blockchain. Subsequently, users can burn their USDC-backed stablecoins to withdraw the USDC held in xReserve. The following diagram shows how xReserve handles deposits and withdrawals.

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xReserve deposits

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 stablecoins 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 stablecoins on the remote blockchain.

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xReserve withdrawals

Subsequently, these steps occur when a user withdraws USDC from xReserve:
  1. A user requests to burn USDC-backed stablecoins on the remote blockchain and withdraw USDC on the destination blockchain.
  2. The remote blockchain token contract burns their USDC-backed stablecoins 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.
As part of the same withdrawal, xReserve can forward funds to another blockchain. This lets users withdraw funds on a blockchain other than the source blockchain without performing an additional crosschain transfer.When the destination is an xReserve source blockchain (Ethereum or Arc), USDC is released directly from the xReserve contract on that blockchain, with no crosschain forwarding.