CoinW Research Institute

Arc is not another general public chain pursuing high TPS, but a comprehensive upgrade by Circle attempting to unify the issuance, cross-chain, payments, institutional clearing, compliance privacy, and AI Agent payments of USDC onto the same execution layer. If the core of the last round of stablecoin competition was "who issued more dollar assets," the next phase represented by Arc may be "who controls the settlement layer of stablecoin liquidity."

1. Project Introduction

Arc is the native Layer1 public chain for stablecoins first disclosed by Circle in August 2025, with the mainnet white paper officially released on May 11, 2026. The mainnet is planned to launch this summer. Arc uses USDC as its native Gas token, focusing on sub-second finality, an embedded foreign exchange settlement engine, and a protocol-level compliance framework, employing the Malachite consensus engine for higher throughput. Arc is the core vehicle for Circle to upgrade itself from a USDC issuer to a stablecoin settlement layer operator.

The launch of Arc is deeply bound to Circle's capital route. Circle completed its IPO on the New York Stock Exchange (stock code CRCL) in June 2025, and the market valuation of Circle has risen to approximately $30 billion. Arc is the core infrastructure supporting this valuation anchor, focusing on bringing real financial activities on-chain, including cross-border payments, stablecoin foreign exchange, asset tokenization, lending, fund management, capital market settlement, and future micro-automatic payments between AI Agents.

Unlike most Layer1 chains that build ecosystems first, Arc's sequence is the reverse; Circle already has USDC, the world's second-largest stablecoin network, and now is adding a dedicated settlement chain to it. If the core of the last round of stablecoin competition was "who issued more dollar assets," the next phase represented by Arc is "who controls the default infrastructure for stablecoin liquidity."

2. Team Background

Arc is led by Circle Internet Group. Circle was founded in 2013 by Jeremy Allaire and Sean Neville and is the issuer of the world's largest compliant dollar stablecoin, USDC. As of May 2026, the circulating supply of USDC is approximately $76 billion, with a market share of stablecoins only second to USDT. Circle's core team has extensive experience in compliance, clearing, and traditional financial infrastructure, and its CEO Jeremy Allaire has long been involved in discussions about stablecoin regulation in the U.S. and policies like the EU MiCA, which has also made Arc emphasize compliance, auditability, and institutional adaptability more in its underlying architecture design.

The recent popularity of Arc was directly catalyzed by two events on May 11. First, Circle disclosed the private placement of the ARC token in its Q1 2026 financial report, raising $222 million, corresponding to a $3 billion FDV for the Arc network. Participants include leading institutions such as a16z, BlackRock, and Apollo Funds. Second, Circle released the ARC white paper, systematically disclosing the token economic model for the first time, with the mainnet expected to launch in summer 2026. The public testnet was already online in October 2025, with partners including BlackRock, Visa, Mastercard, AWS, etc. According to the Arc white paper, as of early May, the Arc testnet had processed approximately 244 million transactions.

3. Major Advantages of ARC

USDC Native Gas and Sub-Second Settlement

Arc uses USDC as its native Gas token, reducing the budget uncertainty for enterprise users caused by Gas fluctuations. Developers do not need to hold volatile assets for the infrastructure layer, and enterprises can directly complete financial accounting with stablecoins. In terms of settlement, Arc provides sub-second certainty for payment and financial settlement scenarios.

Optional Privacy, EVM Compatibility, and Protocol-Level Compliance

Arc retains EVM compatibility, significantly reducing migration costs for developers; meanwhile, it supports optional privacy, balancing on-chain transparency and financial-grade data protection. Its compliance framework is embedded at the protocol level, natively supporting account permissions, sanctions list verification, and institutional KYC labels, while introducing privacy technologies such as zero-knowledge proofs (ZK) to allow transaction parties to selectively disclose transaction amounts, account relationships, or business data while meeting regulatory audit requirements.

This auditable but not overly public design better meets the dual needs for data compliance and commercial privacy from financial institutions, payment companies, and RWA scenarios, and is one of the key features distinguishing Arc from general Layer1.

Institution-Level Stablecoin Infrastructure and AI Agent Payment Network

Arc is positioned not just as a stablecoin settlement chain, but as a next-generation stablecoin financial infrastructure targeting institutional scenarios. Its native integration of Circle's USDC, institutional capital inflow and outflow channels, and developer tools enables financial institutions, payment service providers, and stablecoin issuers to perform fund dispatching and compliance settlement under a unified framework, lowering the integration and operational complexity introduced by multiple intermediate infrastructures.

At the same time, Arc is attempting to extend the stablecoin payment infrastructure to AI Agent economic scenarios. Circle is promoting the construction of financial infrastructure aimed at the Agentic Economy and is exploring the stablecoin payment capabilities of AI Agents with ecological participants like AWS, with the goal of enabling AI Agents to automatically complete API calls, data access, computing power procurement, and service settlement micro-payment processes based on USDC, thereby promoting inter-machine payment as a new application scenario for stablecoins.

4. Token Economics of ARC

The initial total supply of ARC is 10 billion coins, with a distribution structure of: ecosystem 60% (for token sales, developer funding, network growth, ecological incentives), Circle 25% (protocol development, operational support, validator infrastructure, governance participation), long-term reserve 15% (strategic flexibility, systematic risk buffer, long-term ecological stability). It is worth noting that the white paper clearly states that ARC does not represent equity, debt, or profit rights of Circle, nor does it constitute a claim to Circle's assets or profits.

The main functions of ARC include staking, governance, fee capture, platform-level benefits, and ecological coordination. The most noteworthy aspect is its fee mechanism; Arc users can pay protocol fees with assets like USDC, but the protocol layer will uniformly convert the fees into ARC, with a portion allocated to validators and stakers, and another portion permanently burned to offset inflation. The initial annual inflation rate of ARC is about 2%-3%, gradually decreasing with the development of the network; the long-term goal is to achieve inflation neutrality under the balance of supply and demand through the fee recycling and burning mechanism generated by network usage.

Source: https://6778953.fs1.hubspotusercontent-na1.net/hubfs/6778953/PDFs/arc_whitepaper.pdf

5. How to Participate

First, users can obtain Arc test tokens from the Circle Faucet for subsequent interactions on the testnet. Developers can further check Arc Docs, where the official documentation provides guidance on connecting to the Arc test RPC, deploying contracts, using USDC to pay for Gas, sending stablecoins, cross-chain bridges, and other operations.

Meanwhile, the Arc ecosystem has also opened application channels for project teams through Circle Developer Grants. This program mainly targets teams building on Arc and the Circle Developer Platform, focusing on supporting AI Agent payments, P2P payments, fund management, and other areas. Selected projects may receive USDC funding, joint marketing, technical support, and Circle ecological resources.

Ordinary users can participate in official community tasks for Arc. Users can enter the Arc Community, register and complete verification using their Google email or LinkedIn account. This activity ranks according to points, with higher levels potentially having greater priority for future activities like token offerings, whitelists, or airdrops. In terms of participation strategy, ordinary users can prioritize completing daily active tasks, reading content, watching videos, commenting and replying, and posting to continuously increase their level; users with content capabilities or community resources can try publishing high-quality articles, participating in video sharing, or offline activities to gain higher points. In addition, users can also join the official Discord to follow early identity roles, ecological activities, and subsequent testnet tasks.

6. Competitive Landscape

Arc is pushing Circle from being a company reliant on stablecoin issuance and reserve income towards being a settlement network, developer entry point, and institutional on-chain infrastructure platform. Previously, the growth of USDC primarily came from expanding circulation and reserve interest income in the U.S. high-interest environment; while the second growth curve provided by Arc is extending USDC from on-chain dollars to enterprise payments, RWA settlement, cross-chain liquidity, and AI Agent micro-payments in the execution layer.

However, Arc's competitive advantages also come with two types of risks. First, there is tension between centralization and neutrality. Arc is initially upgraded and managed by Circle, which institutions may prefer for trustworthy governance, but crypto-native users may question its neutrality. Second, while USDC as Gas enhances user experience, it weakens the direct holding demand for ARC, making ARC's value capture more dependent on fee conversion, staking, and burning. Based on this, CoinW Research Institute believes that evaluating ARC should not only focus on conventional indicators like daily active addresses but also pay attention to real fee scales, USDC settlement scales, the number of institutional applications going live, and burn coverage rates.

For users, participation in ARC can be divided into indirect observation and direct involvement. In terms of indirect observation, CRCL stocks can serve as a window to observe the overall business of Circle, but they are also affected by the U.S. stock market, performance, interest rates, and regulatory expectations. Users can pay attention to indicators such as CRCL market value and the degree of pullback in stock price relative to the high point post-IPO. For direct involvement, they need to wait for the public sale after the mainnet launch of ARC; currently, users can engage in early ecosystems through official community participation, testnet interactions, etc. Circle’s disclosure of the ARC token private placement as a listed company is essentially exploring a new funding method parallel to "equity + token" within the existing framework. If this model succeeds, it may provide a certain practical reference for subsequent compliant institutions issuing tokens.

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