Circle Public Blockchain Arc, a Libra + Monero coin + Consortium Blockchain

"The first stablecoin stock" Circle announced its latest layout in the Q2 2025 financial report, a public chain called Arc, which is also a Layer 1 specifically designed for stablecoins. It clearly targets competitors Tether's Plasma and Stable. Arc will launch its public Testnet this fall. Let's take a look at the latest creation from Circle and its technical features.

First, Arc is an EVM-compatible Layer-1 blockchain designed for stablecoin finance and asset tokenization, providing a foundational settlement layer for programmable money on the internet, particularly suitable for scenarios such as global payments, foreign exchange (FX), and capital markets. The goal is to address the barriers encountered by existing public chains in enterprise and institutional applications, such as transaction fee volatility, settlement uncertainty, and lack of privacy. Here we know that Arc is closely related to payments, and it is worth noting that Arc does not seem to be to C.

The main technical features of Arc

Using USDC as the Native Gas and Stable Fee Mechanism

Arc uses USDC as the native asset for paying transaction fees (Gas) and employs 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, which smooths out short-term fluctuations and ensures that transaction costs remain consistently low.

In addition to USDC, Arc also plans to integrate support for Gas fee payments for other stablecoins and tokenized fiat currencies through a dedicated "Paymaster" (a payment channel).

Extremely High Performance

Arc uses the high-performance consensus engine "Malachite" based on the Tendermint BFT protocol. This enables it to achieve deterministic settlement finality, with transactions confirmed and irreversible in less than a second.

Of course, there are also validators. The network is secured by a limited group of well-known institutions that are permissioned and geographically distributed as validators. The identities of these validators are public and must adhere to high standards of accountability and operational assurance. This easily brings to mind the former Libra.

In a test setup with 20 geographically distributed validator nodes, Arc is able to handle approximately 3,000 transactions per second (TPS), with a finality confirmation time of less than 350 milliseconds. If using 4 validator nodes, the throughput can exceed 10,000 TPS, with a finality time of less than 100 milliseconds.

Optional Privacy Protection Features

Arc's privacy roadmap begins with the "Confidential Transmission" feature, which encrypts transaction amounts to keep them hidden from the public, while the addresses of both parties involved remain visible. This is a very B2B feature that protects sensitive business information.

Additionally, purely for regulatory purposes, Arc's privacy model allows for selective disclosure through mechanisms like "view keys," similar to Monero, as many transactions are private but can authorize third parties (such as auditors or regulatory agencies) to access specific transaction data. Institutions can always fully view their clients' transactions to meet regulatory requirements such as transaction monitoring and travel rules.

The privacy feature is implemented through a modular backend, initially using Trusted Execution Environment (TEE) technology to handle encrypted data. In the future, there are 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 that not all MEV is harmful. It classifies MEV into two categories: "constructive" (such as arbitrage that aids in stablecoin price discovery) and "harmful" (such as sandwich attacks).

To alleviate the MEV problem, Arc's roadmap includes the implementation of technologies such as cryptographic memory pools, batch transaction processing, and multiple proposers to curb predatory trading behavior while preserving beneficial arbitrage activities.