What is Arc? Complete Guide to Circle's Stablecoin-First Blockchain

Arc is an open Layer-1 blockchain explicitly built for stablecoin finance, designed to deliver enterprise-grade performance and trust for global financial applications. Unlike general-purpose blockchains that support various digital assets, Arc focuses exclusively on stablecoin infrastructure, enabling instant, cost-effective, and compliant financial services.

Launched by Circle in August 2025, Arc addresses the fundamental challenges traditional businesses face when using existing blockchain infrastructure: volatile gas fees, slow settlement times, and limited privacy options. This purpose-built approach positions Arc as the foundation for the next generation of digital finance.

The most distinctive feature of Arc blockchain is its use of USDC as the native gas token. This means users pay transaction fees directly in USDC rather than volatile cryptocurrencies, providing predictable, dollar-denominated costs for every transaction.

This design eliminates one of the biggest barriers to enterprise blockchain adoption. As Circle's research shows, the stablecoin market reached $200 billion in 2024 and could double to $400 billion in 2025, driven largely by businesses seeking stable transaction costs.

Arc operates on the Malachite consensus engine, delivering deterministic sub-second finality. This high-performance infrastructure can process up to 3,000 transactions per second with 20 validators, or up to 10,000 transactions per second with just four validators.

The speed and reliability make Arc suitable for demanding enterprise use cases where transaction finality cannot be uncertain. Federal Reserve data indicates that stablecoin market capitalization has grown 45 times since December 2019, highlighting the increasing need for robust settlement infrastructure.

Arc includes an institutional-grade request-for-quote system for stablecoin foreign exchange. This native FX engine enables 24/7 peer-to-peer settlement and automated price discovery between different stablecoins, creating a comprehensive trading environment within the blockchain itself.

Arc offers opt-in compliant privacy features, allowing businesses and users to selectively shield sensitive financial data while maintaining regulatory compliance. This addresses a critical need in traditional finance where transaction privacy must balance transparency requirements with competitive confidentiality.

The blockchain maintains compatibility with the Ethereum Virtual Machine, enabling developers to use existing tools, programming languages, and frameworks. This reduces barriers to entry for developers already familiar with Ethereum-based development.

Arc is designed to work seamlessly with Circle's broader ecosystem, including the Cross-Chain Transfer Protocol and other blockchain networks. This interoperability ensures Arc strengthens rather than fragments the existing blockchain landscape.

While traditional blockchains subject users to volatile gas fees that can fluctuate dramatically based on network congestion, Arc provides stable, dollar-denominated transaction costs. Industry analysis shows that stablecoin companies are projected to receive $12.3 billion in funding in 2025, partly driven by demand for predictable transaction costs.

Arc's sub-second finality contrasts sharply with networks like Bitcoin (10+ minutes) or Ethereum (13+ seconds). This speed is crucial for financial applications where delayed settlement creates counterparty risk.

General-purpose blockchains attempt to serve multiple use cases, often resulting in compromises. Arc's singular focus on stablecoin finance allows for optimizations that wouldn't be possible in a multi-purpose environment.

Arc transforms cross-border payments by enabling instant, low-cost settlement with fiat-backed stablecoins. For organizations already connected to Circle's Payments Network, Arc provides a powerful on-chain settlement layer with programmatic conversion capabilities.

The blockchain supports delivery-versus-payment settlement and margin collateralization for tokenized financial instruments, including securities, treasuries, and structured products. Market projections suggest the stablecoin market will reach $1.1 trillion by 2035 with a 17.8% CAGR.

Developers can create perpetual futures markets centered on stablecoin pairs, allowing leveraged trading across global currency markets. Arc's built-in FX engine provides the real-time pricing and atomic settlement infrastructure necessary for these sophisticated financial products.

Arc benefits from the GENIUS Act, which established a federal regulatory framework for payment stablecoins in the United States. This regulatory clarity has encouraged more traditional financial institutions to explore blockchain-based payment solutions.

According to World Economic Forum analysis, clear and uniform regulations help expand stablecoin use, and the new legislation legitimizes the asset class while enhancing consumer protection.

Arc creates a dedicated environment optimized specifically for stablecoin applications. Both approaches serve different needs: Eco excels at bridging fragmented liquidity across chains, while Arc provides a purpose-built foundation for new stablecoin-native applications.

Arc's use of USDC as a native asset eliminates the wrapped token risks that plague cross-chain bridges. Research indicates that cross-chain bridges have been hacked for more than $2.8 billion, representing almost 40% of all Web3 hacks.

Arc entered private testnet in August 2025, with public testnet expected this fall and mainnet beta planned for 2026. Early access is available through registration at arcnetwork.xyz.

The phased rollout approach allows Circle to refine the network's performance and security while gathering feedback from enterprise partners and developers.

Some analysts have criticized Arc's validator structure, with some calling it more of a "consortium chain" due to pre-approved validators rather than fully decentralized validation. However, this design choice prioritizes enterprise-grade reliability and regulatory compliance over pure decentralization.

Unlike traditional blockchains, where validators earn native tokens with uncertain value, Arc's use of USDC as the native token creates a more stable economic model. This could reduce some traditional validator incentives but provides predictable rewards.

Fireblocks research indicates that 90% of organizations are taking action on stablecoin adoption, with 48% citing speed as the top benefit. Arc's infrastructure directly addresses these priorities with sub-second settlement and predictable costs.

As ARK Invest analysis shows, stablecoins have captured approximately 15-20% of non-US dollar holders in just over five years—a remarkable achievement that positions specialized infrastructure like Arc as critical to future financial systems.

Developers can choose to build applications directly on Arc or integrate its cross-chain capabilities into existing applications. The EVM compatibility means existing Ethereum development tools and frameworks work seamlessly with Arc.

Circle provides comprehensive development resources, including SDKs and documentation for integrating Arc's unique features like USDC gas payments and native FX capabilities.

Arc is purpose-built exclusively for stablecoin finance, using USDC as the native gas token and including built-in FX engines. Unlike general-purpose blockchains, every component is optimized for stablecoin applications.

Arc includes opt-in privacy features that allow selective transparency for regulatory requirements while protecting sensitive business data. The blockchain operates under Circle's regulated framework and benefits from clear US stablecoin legislation.

Yes, Arc is EVM-compatible, meaning existing Ethereum applications can be deployed with minimal modifications. However, they can also take advantage of Arc's unique features, such as USDC gas payments and native FX capabilities.

Transaction fees are paid in USDC and designed to be predictable and low-cost. Unlike volatile gas fees on other networks, Arc provides dollar-denominated pricing that enterprises can plan around.

Arc is currently in private testnet, with public testnet expected in fall 2025 and mainnet beta in 2026. Early access is available for qualified developers and enterprises.

Arc represents a fundamental shift toward specialized blockchain infrastructure optimized for specific use cases rather than general-purpose solutions. As the stablecoin market continues to grow rapidly, purpose-built infrastructure like Arc will likely become increasingly important for enterprises seeking reliable, cost-effective, and compliant digital financial services.

By focusing exclusively on stablecoin finance from day one, Arc eliminates many of the friction points that have hindered enterprise blockchain adoption, positioning itself as essential infrastructure for the future of digital money.