Circle public chain Arc, a Libra+ Monero + consortium chain
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Circle public chain Arc, a Libra+ Monero + consortium chain
What are the technical features of Arc?
Navigating Web3 tides with focused insightsBy:律动
"The first stablecoin stock," Circle, revealed its latest initiative in its Q2 2025 earnings report: a public blockchain named Arc, a Layer-1 dedicated to stablecoins. Clearly positioned against competitors Tether's Plasma and Stable, Arc will launch its public testnet this fall. Let’s take a look at the technical features of Circle’s newest project.
First, Arc is an EVM-compatible Layer-1 blockchain designed specifically for stablecoin finance and asset tokenization, serving as a foundational settlement layer for programmable money on the internet—particularly suited for global payments, foreign exchange (FX), and capital markets. Its goal is to address barriers that existing blockchains face in enterprise and institutional adoption, such as fluctuating transaction fees, settlement uncertainty, and lack of privacy. It's clear that Arc is strongly tied to payments, and notably, it does not appear to target consumers (to C).
Key Technical Features of Arc
USDC as 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 base fees using an exponentially weighted moving average of block utilization to smooth short-term volatility, ensuring consistently low transaction costs.
In addition to USDC, Arc plans to support gas fee payments for other stablecoins and tokenized fiat currencies through dedicated "Paymasters" (payment channels).
High Performance
Arc employs a high-performance consensus engine called "Malachite," based on the Tendermint BFT protocol. This enables deterministic settlement finality, with transactions confirmed and irreversible in under one second.
There are validators: the network is secured by a limited set of permissioned, geographically distributed, well-known institutions whose identities are publicly disclosed and who must adhere to high standards of accountability and operational security. This setup evokes memories of the former Libra.
In test configurations with 20 geographically distributed validator nodes, Arc can handle approximately 3,000 transactions per second (TPS), with finality confirmation under 350 milliseconds. With four validator nodes, throughput exceeds 10,000 TPS, and finality time drops below 100 milliseconds.
Optional Privacy Features
Arc’s privacy roadmap begins with a “confidential transfer” feature that encrypts transaction amounts so they are not visible to the public, while sender and recipient addresses remain visible. This is a distinctly business-oriented (to B) feature aimed at protecting commercial sensitivity.
Also designed with regulation in mind, Arc’s privacy model allows selective disclosure through mechanisms like "view keys," similar to Monero. While many transactions are private, third parties such as auditors or regulators can be granted access to specific transaction data. Institutions can always fully view their customers’ transactions to meet regulatory requirements like transaction monitoring and travel rule compliance.
Privacy features are implemented via a modular backend, initially using Trusted Execution Environment (TEE) technology to process encrypted data, with future 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 categorizes MEV into "constructive" (e.g., arbitrage that aids stablecoin price discovery) and "harmful" (e.g., sandwich attacks).
To mitigate MEV, Arc’s roadmap includes implementing encrypted mempools, batch transaction processing, and multi-proposer systems to suppress predatory trading while preserving beneficial arbitrage activities.
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