Circle Launches Arc, a USDC-Native Chain for Institutions

Circle launched Arc, a layer-1 blockchain that uses USDC as its native gas token. The public testnet went live in October 2025 and Circle plans a mainnet beta in 2026. The company also announced an ARC token and closed a $222 million presale that set a $3 billion fully diluted valuation.

Circle built Arc for stablecoin-focused applications and cited limitations on existing blockchains, including fee volatility, probabilistic settlement that can be reversed by chain reorganizations, limited privacy for commercial transactions and fragmented liquidity across networks.

Rachel Mayer, Circle’s vice president of product management, said clients repeatedly asked the company to make costs predictable, settlement finality deterministic and privacy compatible with real-world obligations.

Arc uses USDC to pay transaction fees to avoid exposure to volatile fee tokens. The fee model adapts Ethereum’s EIP-1559 concept but smooths adjustments with a weighted moving average of demand. Fees are denominated in USDC and directed to an on-chain Arc Treasury. The network can also accept other stablecoins through a paymaster mechanism.

The network’s consensus layer runs on Malachite, a Byzantine Fault Tolerant engine based on Tendermint. Validator selection is permissioned at launch, with operators chosen for operational resilience, geographic distribution and regulatory compliance. Circle plans to move toward a permissioned proof-of-stake model over time.

To reduce the risk of unfair execution and replay-style attacks, Circle is developing encrypted mempools, batched transaction processing and a multi-proposer consensus approach.

Arc includes a modular privacy stack. The initial privacy feature, confidential transfers, hides transaction amounts while keeping addresses visible. Private computation is handled via precompiles that call Trusted Execution Environments, and institutions can grant auditors or regulators view keys for selective disclosure. The roadmap lists private state, zero-knowledge proofs, multi-party computation and fully homomorphic encryption as future additions.

Circle published an Arc white paper in May 2026 that describes the ARC token as the network’s coordination mechanism during the transition to proof-of-stake. The initial supply will be 10 billion tokens, with new issuance expected at about 2–3% annually. Token allocations assign 60% to the ecosystem for grants and participation mechanisms, 25% to Circle and 15% to a long-term reserve. Stakers may receive discounted transaction rates and preferential access from ecosystem partners.

The $222 million presale was led by Andreessen Horowitz, which committed $75 million, and included institutional investors such as BlackRock and Apollo Funds. Circle said the presale proceeds will support developer grants, ecosystem growth and other participation mechanisms.

Arc integrates with Circle’s existing tools: Mint converts fiat to USDC on Arc, CCTP moves USDC across chains by burning and reminting, and Gateway provides chain-agnostic USDC balances with built-in liquidity rebalancing for wallets and applications. Circle positions Arc to work with its cross-chain services.

Arc will operate alongside existing public layer-1s, layer-2 networks and other stablecoin-focused chains. Circle targets institutional participants and plans broader beta access and continued feature rollouts through 2026.