Circle Public Chain Arc: A New Layer 1 Revolution Combining Libra + Monero + Consortium Chain

“First Publicly Traded Stablecoin” Circle disclosed its latest strategic layout in its Q2 2025 financial report: a blockchain called Arc, which is also a Layer1 dedicated specifically to stablecoins. It is clearly targeting competitors such as Tether’s Plasma and Stable. Arc will launch a public testnet this fall—let’s take a look at Circle’s latest work and what technical features it offers.

First, Arc is an EVM-compatible Layer-1 blockchain designed specifically for stablecoin finance and asset tokenization, providing a foundational settlement layer for programmable money on the internet. It is especially suitable 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 cases, such as transaction-fee volatility, settlement uncertainty, and a lack of privacy. Here, we know Arc is strongly tied to payments; what’s particularly noteworthy is that Arc appears not to be B2C.

Main Technical Features of Arc

Use USDC as Native Gas and Stable Fee Mechanism

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

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

Extremely High Performance

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

Of course, there are also validators. The network is secured by a limited set of well-known, permissioned, geographically distributed institutions serving as validators. These validators’ identities are publicly disclosed, and they must comply with high standards of accountability and operational safeguards. This is easy to draw comparisons to the former Libra.

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

Optional Privacy Protection Features

Arc’s privacy roadmap starts with a “Confidential Transmission” feature. It can encrypt transaction amounts so they are not visible to the public, while the addresses of the two transaction parties remain visible. This is a very B2B feature that protects commercially sensitive information.

There is also privacy designed entirely for regulatory needs: Arc’s privacy model allows for selective disclosure via mechanisms such as “view keys,” similar to Monero. Since many transactions have privacy, it can authorize third parties (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 rules.

Privacy features are implemented through a modular backend. In the early stages, it uses Trusted Execution Environment (TEE) technology to process encrypted data, and plans to integrate more advanced technologies in the future, 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 actions that help stablecoin price discovery) and “harmful” (such as sandwich attacks).

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

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