Circle Public Chain Arc: A New Layer 1 Revolution Combining Libra, Monero, and Consortium Blockchain

“Stablecoin No. 1 Stock” Circle revealed its latest plans in its 2025 Q2 earnings report: a public blockchain called Arc—also a Layer 1 dedicated to stablecoins. It’s clearly aimed at competing products like Tether’s Plasma and Stable. Arc will launch a public testnet this fall, so let’s take a look at Circle’s newest offering and what technical features it has.

First, Arc is a Layer-1 blockchain that is EVM-compatible and specifically designed for stablecoin finance and asset tokenization. It provides a base settlement layer for programmable money on the internet, and is especially suited for scenarios such as global payments, foreign exchange (FX), and capital markets. The goal is to address obstacles that existing public chains face in enterprise and institutional use—such as transaction-fee volatility, settlement uncertainty, and the lack of privacy. As we know, Arc is closely tied to payments, and what stands out is that Arc seemingly isn’t to C.

Arc’s main technical features

Use USDC as native Gas and a stable-fee mechanism

Arc uses USDC as the native asset to pay transaction fees (Gas), and adopts an Ethereum EIP-1559-inspired fee market mechanism. However, by updating the base fee using an exponentially weighted moving average of block utilization, it smooths short-term fluctuations and keeps transaction costs consistently low.

In addition to USDC, Arc also plans to support Gas fee payments for other stablecoins and tokenized fiat via a dedicated “Paymaster” (a payment channel) integration.

Extremely high performance

Arc uses a high-performance consensus engine called “Malachite,” based on the Tendermint BFT protocol. This allows it to achieve deterministic finality, with transactions confirmed in under one second and made irreversible.

Of course, there are also validators: the network is secured by a limited set of permissioned, geographically distributed well-known institutions acting as validators. These validators’ identities are public, and they must adhere to high standards of accountability and operational guarantees. It’s easy to think of Libra.

In a test setup with 20 geographically distributed validator nodes, Arc can handle roughly 3,000 transactions per second (TPS), with finality confirmation time under 350 milliseconds. With 4 validator nodes, throughput can exceed 10,000 TPS, and finality time is under 100 milliseconds.

Optional privacy protection features

Arc’s privacy roadmap starts with a “confidential transfers” feature that encrypts transaction amounts so they aren’t visible to the public, while the addresses of the transaction counterparties remain visible. This is very to B functionality—it protects business-sensitive information.

There’s also a part that is entirely for regulation: Arc’s privacy model allows selective disclosure through mechanisms such as “viewing keys,” similar to Monero. Since many transactions have privacy, disclosure can be authorized for third parties (such as auditors or regulators) to access specific transaction data. Institutions can always fully view their customers’ transactions to meet regulatory requirements like transaction monitoring and travel-rule compliance.

The privacy features are implemented through a modular backend. Initially, they use Trusted Execution Environment (TEE) technology to handle encrypted data, and in the future it plans to integrate more advanced technologies such as Multi-Party Computation (MPC), Fully Homomorphic Encryption (FHE), and Zero-Knowledge Proofs (ZKPs).

MEV mitigation roadmap

Arc believes that not all MEV is harmful. It divides MEV into two categories: “constructive” (such as arbitrage that helps stablecoin price discovery) and “harmful” (such as sandwich attacks).

To mitigate the MEV problem, Arc’s roadmap includes technologies such as encrypted mempools, batch transaction processing, and multiple proposers, to suppress predatory transaction behavior while preserving beneficial arbitrage activities.

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