What is Arc Network? A Guide to Circle’s Layer-1 Blockchain

In August 2025, Circle, the firm behind the USDC stablecoin, announced the launch of Arc. Arc blockchain is described as a purpose-built layer-1 blockchain designed to power the next generation of financial innovation, with a particular focus on stablecoins.

However, there is more to it than what meets the eye. This article explains the Arc network,  its structure, and its aim to be a top platform for tokenized, yield-bearing assets. Even though the project is still in its early stages at the time of writing this Arc blockchain guide, the insight provided so far by Circle shows where it is headed.

What is the ARC Blockchain?

Arc is a blockchain network designed by Circle to provide an enterprise-grade foundation for a wide range of financial applications, including payments, foreign exchange (FX), and capital markets. 

According to Circle, the network’s design prioritizes performance, reliability, and liquidity, which are essential for builders to meet the demands of a global financial system. By offering a high-throughput and low-latency environment, Arc aims to overcome the limitations of existing blockchain solutions and unlock new possibilities for economic innovation. 

Introducing Arc, the home for stablecoin finance.@Arc is an open Layer-1 blockchain purpose-built to drive the next chapter of financial innovation powered by stablecoins.

Designed to provide an enterprise-grade foundation for payments, FX, and capital markets, Arc delivers… pic.twitter.com/Z8FHUls1xY

— Circle (@circle) August 12, 2025

Furthermore, Arc Network is compatible with the Ethereum Virtual Machine (EVM), ensuring that developers can leverage their existing expertise and tools to create decentralized applications (dApps) on Arc. This focus on compatibility extends beyond the Arc ecosystem, as the platform is designed to interoperate seamlessly with the broader multichain landscape, fostering collaboration and innovation across different blockchain networks.

Additionally, a key milestone in Arc’s development is the integration of the Malachite team and intellectual property (IP) from Informal Systems into Circle. Malachite’s high-performance consensus engine forms the core of Arc, providing the platform with its speed, scalability, and security. 

Therefore, in line with its commitment to fostering a vibrant and collaborative ecosystem, the core software for Arc will be released under a permissive license. This open-source approach empowers the broader developer community to contribute to the platform’s development, extend its functionality, and build innovative applications on top of it. 

Key Features of Arc Network

The Arc blockchain has five core features as revealed in its litepaper. This includes:

• Use of USDC as native gas
• Built-in FX engine
• Faster Settlement and Finality
• Opt-in privacy
• Circle Platform Integration

The following section takes a closer look at each of these features.

• USDC as Native Gas

A core feature of the Arc blockchain is that gas fees on the blockchain will be paid using USDC, instead of a cryptocurrency like ETH with a volatile price. This shift to USDC-denominated gas fees brings more certainty to users who can correctly predict their transaction fees, similar to moving money on a banking application.

• Built-in FX Engine

The Arc blockchain system aims to serve the vast foreign exchange market. It has its own FX engine, which is a system for getting price quotes. It’s not only interested in current markets. For regular over-the-counter derivative markets, FX is the second most significant market type after interest rates. In June 2024, it had nearly $5 trillion in total value outstanding (according to the BIS). Circle’s Arc will help support foreign exchange perpetual futures on the blockchain using stablecoin pairings.

Additionally, the platform enables the issuance, settlement, and composability of regulated real-world assets (RWAs)—including tokenized equities, fixed income, private credit, private funds, and other institutional-grade securities. The firm intends to achieve this by working with licensed companies that issue, hold, and manage assets. This will ensure that the digital tokens are legally strong, have good backing, and work with real-world financial transactions.

• Settlement and Finality

Arc created a special security system to enhance trust and security, going beyond what standard agreement methods can do. This new system uses a fast agreement engine called Malachite, which ensures transactions finalize quickly. 

However, Arc is different from other blockchains like Ethereum and Solana, which allow anyone with the requisite capital and hardware to run a validator. Arc works with a chosen group of established validators, and together, they make sure the network upholds its integrity.

The decision to opt for a seeming “consortium of validators” would make it easier for the Arc blockchain to deliver resilient and regulatory-compliant infrastructure. After all, its main users could be sovereign entities and global enterprises performing mission-critical financial operations. 

• Opt-in Privacy

While many mainstream blockchain networks like Monero integrate privacy by default, Arc will make this optional for users on the network. It argues that, in line with fundamental data privacy requirements, sensitive commercial and personal data, including salary payments, trade finance details, and corporate treasury operations, cannot be exposed on a fully transparent public ledger.

Arc plans to provide users with privacy if they choose, by integrating a flexible design that it can update in the future. The first step in Arc’s privacy plan is about private transfers. This feature is made to hide the number of transactions from everyone, but still lets transactions settle on the blockchain.

Moreover, it’s essential to know that private transfers are not the same as being hidden. Being hidden also hides who is involved, but private transfers still show the addresses on the public record. The main new idea is hiding the amount of the transfer using code.

Arc’s litepaper shows that the new approach helps keep vital business information secret while still letting the public record work with current tools that track addresses on the blockchain. This balanced way will enable the finance industry to use blockchain technology safely and follow the rules.

• Full Circle Platform Integration

The Full Circle platform offers native integration with Circle’s Payments Network (CPN). This integration includes support for various Circle products and services, such as USDC, EURC, USYC1, minting, wallets, contracts, CCTP, gateway, and paymaster.

Through this integration with the leading Circle Platform and EVM Compatibility, the Arc blockchain would inherit interoperability within the broader multichain ecosystem, including the many networks where USDC is currently issued.

According to recent data, USDC had a $65.6 billion market capitalization, with the stablecoin running on a total of 24 networks. Furthermore, data shows that Ethereum is now the most extensive network for USDC, with total USDC supply on the network amounting to $42.6 billion.

What Does Arc Mean for Other Layer-1 Blockchains?

News of Arc Blockchain’s debut has met mixed reactions from the crypto community. While some see the move as a direct response from Circle to a similar product by competitors like Tether, others question the decision. 

The majority of voices in the crypto space claim Circle would have been better off simply launching a layer-2 on the Ethereum network, rather than creating a new blockchain. According to such arguments, the overhead costs and implications of operating a blockchain network to run a stablecoin outweigh any potential benefits for the company.

Still, others claim that Arc Blockchain would create competition for incumbents such as Ethereum and Solana. However, here is what Arc could mean for other blockchains and indeed the crypto industry in general:

• Healthy Competition

A key technological feature of Arc is its supposedly high-performance consensus engine, Malachite, which facilitates sub-second settlement finality. This capability may inspire other Layer-1 blockchains to re-evaluate and optimize their performance metrics.

Moreover, the successful handling of a significant transaction volume with speed and efficiency by Arc could prompt a more exhaustive exploration of similar technological advancements within the broader blockchain landscape.

Circle, the entity behind Arc, has outlined plans for its integration across its existing product suite and services. This strategic move aims to foster interoperability with a considerable number of partner blockchains in anticipation of the public test launch scheduled for this fall.

• Deeper Stablecoin Integration

The introduction of Arc, a blockchain protocol specifically engineered for stablecoin finance and tokenized assets, signals a potential inflection point for broader stablecoin adoption across various Layer-1 blockchains. 

Should Arc achieve its performance objectives, it could serve as a compelling demonstration of the utility of stablecoins in diverse financial applications, thereby encouraging other blockchain ecosystems to deepen their integration of these digital currencies. Circle’s focus on enterprise adoption also means more capital flowing into stablecoins through the new network.

At the same time, it is worth noting that Circle’s blockchain is not the only one focused on stablecoins. Others include Plasma, which raised over $373 million when it sold its tokens, and Stable, which focuses on Tether’s USDT, a major competitor to USDC. The recent arrival of stablecoin-focused layer-1s means more options for users and is overall healthy for the blockchain ecosystem.

When Will Arc Network Launch?

Arc Network is set to enter the private testnet phase within a few weeks after the Circle announcement. This initial phase focuses on developers seeking to build solutions on the Arc blockchain. Next, the network would be opened to a broader audience in a public testnet phase slated for the fall of 2025.

Evidently, Arc Network would launch after the successful completion of these phases, with Circle yet to provide a definitive date.

Will Arc Network Overtake Ethereum or Solana?

Arc Network will require significant effort to overtake Ethereum or Solana, which have had years to build out market share and dominance. Besides, it is worth noting that these blockchains operate at different intersections of the financial industry.

While Arc Blockchain will likely focus on enterprise and stablecoin-related transactions, Ethereum, Solana, and other blockchain networks cater to a broader range of use cases. This includes decentralized finance (DeFi), decentralized science (DeSci), and even stablecoin products. 

Additionally, blockchains like Ethereum and Solana are decentralized and allow anyone to become a validator and contribute to the ecosystem’s development. The same cannot be said of the Arc Blockchain, based on information provided so far by Circle.

Will There Be an ARC Network Airdrop?

Circle has not released any official announcement on the possibility of an Arc blockchain airdrop. 

However, certain users believe that it could happen, especially if the project makes the layer-1 network openly accessible to everyday users. An ARC airdrop would serve as a strategic tool to cultivate early adoption, reward early supporters, and generate momentum as the Arc blockchain prepares for its full release.. 

Circle’s history offers precedent for such initiatives. The company has previously implemented measures to foster user adoption and awareness of its products and services, notably the Circle Yield. Such strategies incentivize users to lock USDC to earn yield on their assets.

The imminent public beta testing, anticipated to commence this fall, and the planned mainnet launch in 2026, present opportune moments to engage potential users. 

The integration of USDC as Arc’s native gas token also aligns with a period of substantial growth for the stablecoin, potentially creating synergistic opportunities for promotional activities.

As the Arc blockchain progresses through its testing phases and towards its mainnet launch, close observation of official communications from Circle will be crucial for individuals interested in the potential ARC airdrop. Right now, though, Circle has promised nothing, and users must be conscious about getting their hopes up.

Rounding Up on Arc Network

Stablecoins are having their breakthrough moment. Interest in the $270 billion market has grown since President Donald Trump signed the GENIUS Act, which set up federal rules for payment stablecoins in the United States.

Building on clearer rules, Circle’s Arc blockchain could be a big step forward for blockchain, especially in the world of business and payments. By focusing on speed, safety, and working with other systems, the new-generation blockchain could fix the problems with traditional financial systems and pave the way for innovative financial solutions.

One of its strong suits is using USDC for fees and having a built-in way to handle different money types, plus its promise to keep things private, making it a strong system for the future of the financial system. 

However, as with most new things in the blockchain industry, and indeed the world in general, time would tell whether the Arc blockchain lives up to expectations. Would it eventually be the go-to channel for users and onboard millions to the crypto space? Only time would tell.

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