Arc – Earlybirds Invest

Circle, the company behind the USDC
USDC

$0.9967

stablecoin, has announced plans to roll out its own blockchain called Arc before the end of 2025.

Arc will be a Layer-1 network that works with the Ethereum Virtual Machine (EVM), which means it can run many of the same tools and programs already used on Ethereum
ETH

$4,644.96

The network will first launch as a public test version, and users will be able to pay transaction fees directly in USDC.

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Arc is being built as a network for stablecoin-related activity. It will include tools for converting between stablecoins, completing transactions in under a second, and offering optional privacy settings.

Circle said Arc will connect smoothly with its current products and will continue to work alongside the many other blockchains it already supports.

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USDC will be central to Arc. Aside from being the network’s fee token, USDC currently has a market value of $65.6 billion and runs on 24 different blockchains. Circle’s decision to make Arc compatible with Ethereum tools should make it easier for developers to use, since they can bring over existing applications without major changes.

The company stated that Arc will support a range of uses, including payments, currency exchange, and financial markets.

Recently, Circle submitted an application to the Office of the Comptroller of the Currency (OCC) to establish a national trust bank, First National Digital Currency Bank, N.A. What did the company say? Read the full story.

Circle’s Arc

Arc will serve as a high-performance base for stablecoin payments, foreign exchange (FX), and capital markets applications.

The network will be compatible with the Ethereum Virtual Machine and will use USDC as its default gas token. It also introduces a built-in stablecoin FX engine, sub-second settlement finality, and optional privacy features.

According to the blockchain network’s litepaper, Arc’s performance targets include 3,000 transactions per second (TPS) with under 350 milliseconds finality using 20 validators. Notably, the network could reach 10,000 TPS and under 100 milliseconds of finality with four validators.

Arc will also integrate confidential transfers, enabling hidden amounts with visible addresses, alongside selective disclosure via a “view key.”

Meanwhile, its MEV mitigation roadmap includes encrypted mempools, batch processing, and multi-proposer setups.

Arc will support Circle’s USYC, an interest-bearing stablecoin backed by short-term US Treasury securities. It will also offer fast bridging via Circle’s CCTP and Gateway, a built-in currency trading system for approved institutions, and AI-powered treasury management tools.

Beyond stablecoins, Arc is designed to host regulated real-world assets such as tokenized equities, bonds, private credit, and institutional-grade funds.

Circle plans to partner with licensed asset issuers, custodians, and fund administrators to ensure these assets are legally compliant, fully collateralized, and integrated with traditional financial obligations.

Community pushback

Despite its ambitious design, Arc has faced pushback from crypto community members.

Columbia Business School adjunct professor Omid Malekan argued that launching another Layer 1 is unnecessary, especially for stablecoins, which may struggle without diverse assets or strong DeFi ecosystems.

Adam Cochran, partner at venture capital firm Cinneamhain Ventures, also criticized the characterization of Arc as a Layer 1 blockchain.

According to him, the network is more accurately a consortium chain operated by a set of pre-approved, private validators. These validators, he noted, have the authority to reverse transactions through “dispute protocols.”

Moreover, he also argued that using USDC as the root token removes the economic incentives needed for validators to act independently, making a decentralized Layer 1 model unfeasible. As a result, he said, the design necessitates a closed, consortium-based structure.

Cochran concluded:

“Blockchains exist because exploitative middlemen, like banks and transfer agents, take undue fees and apply undue censorship. This industry was built to fix that in peer-to-peer systems, not by just building new banks.”

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