To date, Circle’s business model could reasonably be described as remaining neutral. In other words, USDC is distributed wherever users already are (e.g. Ethereum, Solana, Base, Tron, etc.), and then chains compete for its liquidity.
Alas, this unique era seems to be over. Today, Circle officially greenlighted Arc, its own layer 1 blockchain. Now, the stablecoin giant will build its own block space instead of just renting it.
If you haven’t been following the Arc story, Circle first announced its plans for the EVM-enabled L1 in August 2025. The chain’s testnet was deployed in October 2025, and almost a year later, mainnet is finally here.
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And so what East Bow?
At the most basic level, Arc is an EVM-enabled Layer 1, meaning Ethereum applications can be widely redeployed there without learning a new programming language or rebuilding from scratch. Under the hood, transactions are executed through the Ethereum-compatible Reth client and are finalized by Circle’s Malachite consensus engine.
The biggest differences are in what Circle has optimized. Gas is paid directly in USDC, transactions reach finality in less than a second, and developers can deploy permissionless even though the network itself is launched with a permissioned set of known validators, including BlackRock, Mastercard, Visa, DTCC, and Standard Chartered. Arc also supports post-quantum wallet signatures from day one.
You can think of it like Circle trying to split the difference between crypto and TradFi: open apps on top with more predictable, user-friendly infrastructure underneath.
What is actually live?
There is already a lot that can be done beyond just moving USDC. Over 100 apps are live, covering DeFi basics (Uniswap, Aave, Morpho) as well as memecoins (mad And Pompe.fun), which Circle loudly supported as a basis for developing the channel’s culture.
Among those already operating, the CTO of Circle, Nikhil Chandhokmade a note to call StableFXan on-chain exchange system specifically designed to exchange USDC for a growing list of local stablecoins. This bridging function is at the heart of one of Circle’s broader ambitions for Arc: rather than issuing each local stablecoin itself, Circle wants Arc to connect local currencies to the liquidity of USDC and, ultimately, to each other.
Beyond the technology already available, Circle also places an unusual emphasis on layers above the blockchain which makes it all easier to use. There is :
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Arc Portalwhich acts as the network’s front door: users can fund a wallet, trade assets, find apps, access yield opportunities, track their balances, and fund agent portfolios.
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Arc Studiowhich acts as an AI coding agent capable of transforming a prompt into application logic, smart contracts, and code ready for deployment.
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Application kitswhich package common actions like payments, trades, on-ramps, bridging, and earnings into ready-to-use SDKs instead of requiring developers to assemble the entire flow themselves.
Together, these products aim to make Arc easier to use for more than just crypto-native developers, reducing friction for users, builders, and potentially agents who interact with the chain.
What’s next
There’s a lot more to come for the chain as a whole, especially in the near term. Chandhok said Arc’s two main focuses in its first months will be 1. privacy and 2. agents.
On private lifeCircle is developing an opt-in privacy sector that would allow users to hide balances and transaction details while selectively revealing information when necessary. The planned system executes private transactions in trusted execution environments, essentially protected hardware enclaves that keep their contents hidden even from Circle and Arc validators.
On the agentsCircle has already laid the groundwork, with USDC being the predominant currency used for the emerging agent payment protocol, x402, as well as the development of its Agent stack which offers policy-controlled wallets and infrastructure for agents to discover and pay for services.
The next step is to make these agents more like independent economic actors. Circle is working to create verifiable agent identities and histories, reputation systems, and ultimately credit, so an agent can prove the work they’ve done, make money, hire another agent, or potentially borrow based on their history.
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Biggest Bet Arc
This brings us to what may be the most important part of Circle’s thesis. Chandhok doesn’t want Arc to simply siphon off USDC, DeFi, and Ethereum users. As he said, moving existing activity from Ethereum to Arc doesn’t actually grow Circle’s market.
Rather, the gamble is to create markets that barely exist today: agents paying and hiring each other, machine-scale credit, global stablecoins, tokenized assets reaching new buyers, and institutional activity that would never have been recorded in a fully public ledger.
Arc has a lot of competition. Tempo attacks stablecoin payments and auto-commerce from a more payment infrastructure-heavy angle, while Plasma has moved closer to the consumer with Plasma One. Arc is taking a broader direction: institutional markets on one side, open crypto on the other, and a particularly big bet that autonomous agents become a whole new category of economic actors.
The question now is whether this will create a truly new business or simply another destination for existing crypto liquidity. To learn more about what Circle thinks about what’s next, I recommend checking out our full conversation with Chandhok. There is still a lot to dig into.