Sei Network Mandates USDCN Swaps to Prevent Liquidity Loss Ahead of SIP-3 Upgrade

Quick Breakdown

• Sei Network has issued an urgent warning for holders of USDC.n, a legacy bridged stablecoin, to swap for native USDC before March 2026.
• The mandatory migration is triggered by the upcoming SIP-3 upgrade, which will transition Sei into an EVM-only chain and deprecate Cosmos-native assets.
• Liquidity for the legacy token is currently dwindling, with approximately $1.4 million remaining in circulation compared to previous highs.

Sei Network, the high-performance Layer 1 blockchain, has officially cautioned its community that the window to migrate legacy stablecoin holdings is closing. Holders of USDC.n the version of USD Coin bridged via the Noble blockchain must convert their assets into the native USDC issued by Circle to maintain access to their funds. This directive follows the successful integration of native USDC and Circle’s Cross-Chain Transfer Protocol (CCTP) in July 2025, which established a regulated, dollar-backed foundation for the ecosystem.

SIP-3 upgrade forces transition to EVM-only architecture

The primary driver behind this mandatory swap is the impending SIP-3 upgrade, scheduled for deployment on the mainnet in late March 2026. This significant protocol shift is designed to transform Sei into an exclusively Ethereum Virtual Machine (EVM) chain. Consequently, the network will cease support for legacy CosmWasm and Cosmos-native assets, including USDC.n.

Source: SEI

The Sei Foundation warned that failure to migrate before this deadline could result in the total loss of asset accessibility or value as the underlying infrastructure for these tokens is deprecated. Current estimates suggest only about $1.4 million in USDC.n remains on the network, a sharp decline from previous months as users shift toward the canonical version. For users with smaller holdings, the network recommends utilizing decentralized exchanges like DragonSwap or Symphony for immediate swaps. Larger volume holders are encouraged to use a specialized migration tool that batches transactions through Polygon and back to Sei via CCTP.

Declining liquidity impacts DeFi protocol participants

The migration also carries heavy implications for users participating in decentralized finance (DeFi) on Sei. Protocols such as Yei Finance and Takara Lend still hold residual amounts of USDC.n within their lending pools, totalling roughly $207,000 at the time of the announcement. The Sei team has urged suppliers on these platforms to wind down their positions and withdraw assets immediately. Once withdrawn, these tokens must be migrated to native USDC to ensure they remain functional within the post-SIP-3 environment.

The Ethereum network’s 2025 technical upgrades, such as zkEVMs, enhanced scalability and transaction efficiency, moving it closer to its goal as a global decentralized computer. Co-founder Vitalik Buterin urged the community to prioritize “walkaway-proof” applications, focusing on resilient civilizational infrastructure like decentralized identity and governance, over financial speculation. Ethereum’s 2026 objectives center on achieving full decentralization and usability, aiming for a transparent, trustless internet beyond short-term market trends.