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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 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.

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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 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.

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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 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.
Note: 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.