What Arc blockchain is and why Circle built it
Arc is a Layer 1 blockchain created by Circle, the company that issues USDC stablecoin, specifically designed for stablecoin-native financial applications. Unlike traditional blockchains that use volatile cryptocurrencies like ETH or SOL for transaction fees, Arc uses USDC as its native gas token. This means users pay transaction fees in stable dollars rather than assets whose price fluctuates constantly throughout the trading day. Arc is EVM-compatible, allowing developers familiar with Ethereum smart contracts to deploy their applications without learning new programming languages or frameworks. Circle announced Arc in August 2025 after its $1.2 billion initial public offering, positioning it as an « Economic Operating System » for internet-based finance.
The blockchain features sub-second transaction finality, meaning transactions confirm almost instantly compared to minutes on other networks like Ethereum or Bitcoin. Arc integrates directly with Circle’s existing products including Circle Payments Network for institutional settlement and Mint for on-off ramp services connecting traditional banking. The network launched a public testnet on October 28, 2025 with participation from over 100 companies including BlackRock, Goldman Sachs, and Deutsche Bank.
How Arc's USDC gas model works
Traditional blockchains require users to hold native tokens like ETH, BNB, or SOL to pay for transaction processing and smart contract execution. These tokens experience significant price volatility, making it difficult for enterprises to predict operational costs for payment processing or asset transfers accurately. Arc eliminates this problem by using USDC directly as the gas token, providing predictable and stable transaction costs denominated in dollars. A transaction costing 10 cents in USDC today will cost approximately 10 cents tomorrow, unlike Ethereum where gas might fluctuate wildly.
Arc also supports a paymaster system that allows users to pay gas fees using other stablecoins beyond USDC if needed. This flexibility makes it easier for businesses processing payments to operate without holding multiple volatile cryptocurrencies for different operational purposes simultaneously. Circle is exploring the launch of a separate native token for Arc that could serve governance or staking functions alongside USDC. This potential token would operate within the Arc ecosystem without replacing USDC’s role as the primary gas and settlement currency.
Primary use cases Arc targets for stablecoin adoption
Arc focuses on three main application areas: cross-border payments, foreign exchange settlement, and tokenised asset trading for institutional clients globally. The blockchain serves as the settlement layer for Circle Payments Network, which enables real-time stablecoin settlements between banks and financial institutions worldwide. Circle provides pre-audited smart contract templates for tokenisation, NFTs, and programmable capital markets that enterprises can deploy safely without extensive blockchain expertise. The network aims to support humanitarian aid distribution where transparent tracking and instant settlement reduce corruption and improve delivery efficiency significantly.
Arc’s architecture includes optional privacy features that allow institutions to comply with regulations while protecting sensitive commercial transaction data from public visibility. Circle’s Cross-Chain Transfer Protocol processed $31 billion in USDC transfers during Q3 2025, showing 740% year-on-year growth across blockchains. The mainnet beta is planned for launch in 2026 after completing the current testing phase with institutional partners and developer communities. By creating specialised infrastructure for compliant stablecoin operations, Circle positions Arc as essential infrastructure for bringing traditional finance onto blockchain rails permanently.
