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

“Stablecoin’s First Public Company” Circle disclosed its latest plans in its Q2 2025 earnings report: a public blockchain called Arc—also a Layer1 dedicated specifically to stablecoins. It is clearly targeting competitor Tether’s Plasma and Stable. Arc will launch a public testnet this fall. Let’s take a look at Circle’s newest work and what technical features it has.

First, Arc is a Layer-1 blockchain designed specifically for stablecoin finance and asset tokenization, and is EVM-compatible. It provides a base settlement layer for programmable money on the internet, making it especially suitable for use cases such as global payments, foreign exchange (FX), and capital markets. The goal is to address obstacles that existing public chains run into for enterprise and institutional applications—such as volatile transaction fees, settlement uncertainty, and a lack of privacy. Here’s what we know: Arc is strongly tied to payments. What’s particularly noteworthy is that Arc doesn’t seem to be built for direct-to-consumer.

Arc’s Key Technical Features

Use USDC as the native Gas and stable-fee mechanism

Arc uses USDC as the native asset for paying transaction fees (Gas), and adopts a fee market mechanism inspired by Ethereum’s EIP-1559. However, it updates the base fee using an exponentially weighted moving average of block utilization, smoothing short-term volatility and ensuring transaction costs stay consistently low.

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

Extremely high performance

Arc uses a high-performance consensus engine called “Malachite,” built on the Tendermint BFT protocol. This enables deterministic finality—transactions can be confirmed in under one second and are irreversible.

Of course, there are also validators. The network is secured by a set of limited, permissioned, well-known institutions distributed geographically as validators. These validators’ identities are public, and they must follow high standards of accountability and operational guarantees. This is easy to connect to the former Libra.

In a test setup with 20 geographically distributed validator nodes, Arc can process about 3,000 transactions per second (TPS), with a finality confirmation time under 350 milliseconds. If using 4 validator nodes, throughput can exceed 10,000 TPS, with a finality time under 100 milliseconds.

Optional privacy protection features

Arc’s privacy roadmap begins with a “confidential transfers” feature that encrypts transaction amounts so they aren’t visible to the public, while the addresses of the trading parties remain visible. This is a very B-to-B-style capability that protects sensitive business information.

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

The privacy features are implemented via a modular backend. Initially, it uses trusted execution environment (TEE) technology to process encrypted data; in the future, it plans to integrate more advanced technologies such as multi-party computation (MPC), fully homomorphic encryption (FHE), and zero-knowledge proofs.

MEV mitigation roadmap

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

To mitigate MEV issues, Arc’s roadmap includes implementing encrypted mempools, batch transaction processing, and multi-proposer techniques. These aim to suppress predatory transaction behavior while preserving beneficial arbitrage activity.

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