What is Arc?

Arc is an open Layer 1 blockchain designed to provide an enterprise-grade foundation for stablecoin payments, foreign exchange (FX) transactions, and capital markets applications. This EVM-compatible network uses USDC as its native gas token and offers an integrated stablecoin FX engine, sub-second finality, and opt-in privacy controls. Arc will be fully integrated with Circle’s platform and services, while also providing full accessibility and interoperability with dozens of other partner blockchains supported by Circle. The high-performance Malachite consensus engine empowers Arc with security, liveness, and resilience at scale. Arc advances the frontier of stablecoin finance and tokenization, serving as a foundational settlement layer for programmable money on the internet. In this article, we will explore in detail what Arc is, how it works, its use cases, advantages, risks, tokenomics, team, and roadmap.

What is Arc?

Arc is a purpose-built, EVM-compatible Layer 1 blockchain designed for stablecoin finance. It uses USDC as its native gas token, offering deterministic sub-second settlement finality, opt-in privacy, and a stable transaction fee architecture. It is optimized for stablecoin-focused use cases such as global payments, FX, and capital markets.

Malachite, a high-performance consensus engine developed by Informal Systems, provides Arc with a fast, secure, and reliable infrastructure. As an open and composable network, Arc seamlessly interoperates with other blockchain ecosystems.

Integration with the Circle platform supports stablecoins like USDC and EURC, as well as the tokenized money market fund USYC. Arc serves as a launchpad for the next phase of financial innovation, offering a reliable infrastructure for both individual users and enterprises.

Purpose of Arc

The global financial system, while foundational to modern commerce, relies on legacy infrastructure that is incompatible with the speed, openness, and programmability of the internet. Cross-border payments are slow, opaque, and expensive; treasury operations are fragmented across jurisdictions and intermediaries; and capital markets are constrained by manual processes and intermediary layers. While blockchain technology promises programmability and transparency, existing public blockchains hinder enterprise adoption due to limitations such as volatile gas tokens, uncertain settlement finality, and lack of privacy. Arc is purpose-built for stablecoin finance to address these gaps. It offers stable fees with USDC, deterministic finality, and opt-in privacy, combining the requirements of traditional finance with the efficiency of blockchain. Arc enhances financial access and capital mobility, particularly in emerging markets, and provides a reliable settlement layer for stablecoin-based applications.

How Does Arc Work?

Arc is a Layer 1 blockchain optimized for stablecoin finance. Its technical infrastructure consists of the following components:

• Malachite Consensus Engine: A Tendermint-based high-performance Byzantine Fault Tolerance (BFT) protocol, offering sub-second (<350ms) deterministic finality and up to 3,000 TPS transaction capacity. With 4 validators, it can achieve 10,000+ TPS and <100ms finality. In the future, multi-proposer support could increase throughput by 10x.

• USDC Native Gas: Gas fees are dollar-denominated in USDC, providing predictable, volatility-free costs. Other local stablecoins and tokenized money can be used as gas via paymaster integration.

• EVM Compatibility: Compatible with Ethereum tools (MetaMask, ethers.js), offering developers a familiar environment.

• Opt-in Privacy: Confidential transfers encrypt transaction amounts while keeping addresses visible. Trusted Execution Environments (TEEs) provide fast, auditable privacy; future integration of MPC and FHE is planned.

• FX Engine: An enterprise-grade RFQ (Request for Quote) system offering 24/7 PvP settlement and price discovery.

• Circle Integration: Mint, CCTP, and Gateway enable fast fiat-to-stablecoin conversion and cross-chain liquidity.

Transaction Flow:

• USDC Transfer: User initiates a low, fixed-fee transfer with USDC → Malachite finalizes in <1 second → Transaction is irreversible.

• Confidential Transfer: User initiates a TEE-based confidential transfer → Amount is encrypted, addresses remain visible → Auditors access via view key.

• FX Transaction: Price is obtained via RFQ → Smart contract executes PvP settlement.

Future Plans:

• Privacy Enhancements: Transition from confidential transfers to private state and confidential computation.

• MEV Mitigation: Encrypted mempool, batch transaction processing, and multi-proposers to prevent harmful MEV.

• PoS Transition: Permissioned PoS for broader validator participation and governance flexibility.

• Performance Optimization: Two-phase Tendermint variant to reduce latency by 30%.

Arc Use Cases

Arc is used in the following areas:

• Global Payments: Low-cost, fast cross-border payments with USDC.

• Foreign Exchange (FX) Transactions: 24/7 PvP settlement and RFQ-based price discovery.

• Capital Markets: Settlement layer for tokenized equities, bonds, private credit, and funds.

• Treasury Management: Low-risk yield with USYC, automated treasury agents.

• Financial Inclusion: Stablecoin-based financial access in emerging markets.

• DeFi: Secure, compliant DeFi protocols with USDC and USYC.

Usage Steps:

1. Connect to Arc via Circle platform or EVM-compatible wallet (e.g., MetaMask).

2. Mint USDC/EURC from fiat or bridge via CCTP.

3. Perform payments, FX transactions, or DeFi interactions with USDC.

4. Earn yield with USYC or transact with tokenized assets.

5. Protect sensitive transactions with confidential transfers.

Advantages of Arc

• Stable Fees: Dollar-denominated, predictable gas fees with USDC.

• Fast Finality: Malachite with <350ms deterministic settlement.

• Privacy: TEE-based confidential transfers, regulatory compliance.

• EVM Compatibility: Easy development with Ethereum tools.

• FX Engine: 24/7 PvP settlement and price discovery.

• Circle Integration: Mint, CCTP, Gateway for liquidity and access.

• High Performance: 3,000 TPS, with 10,000+ TPS in the future.

Arc Tokenomics

Arc uses USDC, EURC, and USYC instead of a native token:

• USDC: Native gas token, dollar-denominated for stable fees.

• EURC: Euro-based stablecoin for global payments.

• USYC: Tokenized yield asset backed by U.S. Treasury securities.

• Distribution: Circle’s Mint and CCTP for fiat-to-stablecoin conversion.

• Economy: Stable fee market inspired by EIP-1559 with fee smoothing. Fees go to the Arc Treasury.

Arc Investors

Arc is supported by Circle; additional investor information is not specified.

Technical Infrastructure of Arc

• Malachite: Tendermint-based BFT, <350ms finality, 3,000 TPS.

• USDC Gas: Dollar-denominated, predictable fees.

• EVM: Compatible with Ethereum tools for development.

• Privacy: TEE-based confidential transfers, with MPC/FHE planned.

• FX Engine: RFQ and PvP settlement.

• Circle Integration: Mint, CCTP, Gateway for liquidity.

Arc Roadmap

Arc’s public testnet is expected in Fall 2025. The mainnet beta launch will include a stable gas fee architecture, sub-second deterministic finality, and the FX engine roadmap. Circle products (CPN, USDC, EURC, USYC, Mint, Wallets, Contracts, CCTP, Gateway, Paymaster) and third-party ecosystem support will be available. Privacy enhancements will evolve from confidential transfers to programmable privacy. MEV mitigation will include encrypted mempool and multi-proposers. A permissioned PoS transition will increase validator diversity.

Arc Team

• Adi Seredinschi: Principal Product Manager.

• Adrian Soghoian: Principal Software Engineer.

• Sanket Jain: Lead Product Manager.

• Rachel Mayer: VP of Product.

• Gordon Y. Liao: Research Director.

• Sterling B: BD Ecosystem Director.

Official Links

• Website
• X (Twitter)
• Whitepaper

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