Arc is an independent Layer 1 blockchain built by Circle, the company behind USDC, the second-largest stablecoin in circulation. First announced in August 2025, Arc's public testnet launched in October 2025, with the mainnet launching on September 16, 2026. The network has received backing from major financial institutions including BlackRock, Visa, and MasterCard.
Unlike Ethereum Layer 2 solutions that rely on Ethereum for settlement and security, Arc is a standalone blockchain with its own consensus system and validator network. It is EVM-compatible, allowing developers to use existing Ethereum tools and write smart contracts in Solidity.
Distinctive Features
Stablecoin-Native Gas Model: Arc uses USDC for transaction fees, eliminating the volatility associated with cryptocurrency-denominated gas on other blockchains. This allows businesses to budget transaction costs in stable dollar terms.
Fast Settlement: The network uses Malachite, a high-performance consensus engine based on Tendermint, to achieve deterministic finality in under one second. Once a transaction is finalized, it cannot be reversed without requiring additional block confirmations.
Permissioned Validators: Rather than a permissionless model, Arc uses a limited set of known institutional validators to maintain network consensus.
Privacy Infrastructure: Arc Privacy Sector (APS) is designed to support confidential smart-contract execution, allowing sensitive information like balances and transaction details to remain private while applications execute on-chain.
Designed Use Cases
Arc's architecture targets financial applications including cross-border and global payments, programmable foreign exchange trading between different currency stablecoins, tokenized assets, and capital markets infrastructure. The network is built to connect with Circle's existing products such as Circle Mint, CCTP, and Gateway, as well as traditional fiat payment systems and other blockchains.
Fee Structure and Network Economics
Arc's fee system is inspired by Ethereum's EIP-1559 but incorporates a smoothing mechanism using an exponentially weighted moving average of network utilization to reduce short-term fee spikes. The protocol supports other local stablecoins and tokenized fiat currencies through paymaster infrastructure, which can abstract gas payments from users. Network fees are directed to an on-chain Arc Treasury to support long-term network growth.
Architecture and Design
Arc addresses several challenges Circle identified in existing blockchain infrastructure, including volatile gas costs, unpredictable settlement times, and limited transaction privacy for institutional financial activity. The network supports general-purpose applications despite being designed primarily for financial use cases.
