What Is Arc? The Stablecoin Blockchain From USDC Issuer Circle

Circle built Arc as a purpose-built layer-1 blockchain to support stablecoin-driven financial applications, bringing the USDC issuer's design priorities directly into the protocol. Circle says existing blockchains create friction for institutional stablecoin use through volatile fees, probabilistic settlement that risks chain reorganizations, limited privacy for commercial transactions, and fragmented liquidity; Arc's architecture is intended to address those gaps. Arc uses USDC as the native gas currency to remove reliance on volatile tokens for transaction fees, and it can support other stablecoins as gas via a paymaster system. Fees are denominated in USDC and flow to an on-chain Arc Treasury; Circle describes the fee model as inspired by Ethereum’s EIP-1559 but smoothed with a weighted moving average of demand to keep costs predictable. For settlement and consensus, Arc runs the Malachite BFT engine (derived from Tendermint) in a permissioned validator set focused on operational resilience, geographic diversity and regulatory compliance. The network currently operates under proof-of-authority with Circle signalling a potential transition to proof-of-stake in 2027. Several major financial and infrastructure firms operate validators on Arc, and Circle highlights features such as encrypted mempools, batch processing and multi-proposer consensus to reduce settlement risk and improve fairness. Ecosystem support and tooling have been built alongside the chain: lending, trading, custody, and payments partners include Aave, Morpho, Uniswap, Binance, Kraken, Chainlink, Fireblocks, Ledger, and multiple banks and payment providers. Arc also ships developer tools for autonomous AI agents, with Circle citing that USDC represented 98.8% of agent-driven transaction volume per Dune. Circle published an Arc white paper in May 2026 outlining a native ARC token that would serve as a coordination mechanism as the network evolves and shifts to proof-of-stake; ARC issuance and staking are described as mechanisms for validator rewards and potential fee discounts for stakers.