Arc is an open, EVM-compatible Layer 1 blockchain developed by Circle and purpose-built for real-world economic activity, including institutional settlement, stablecoin payments, tokenized assets, and programmable financial applications.
What is Arc?
Financial infrastructure is functional but fragmented. Payments, loans, and currency conversions belong to a single transaction yet settle on separate systems. These systems often settle hours or days apart, each with its own intermediaries and reconciliation. Institutions carry the cost of fragmentation as pre-funding risk, settlement risk, and integration overhead. Arc is designed to bring these workflows onto a shared, programmable settlement layer, dramatically reducing settlement times with Circle’s Cross-Chain Transfer Protocol (CCTP) and settlement reconciliation in canonical USDC.
Arc is a shared settlement layer for economic activity on common, composable infrastructure. Use cases include: payments, lending, capital markets, tokenized real-world assets (RWA), foreign exchange (FX), and agentic financial applications. It pairs an Ethereum-style execution environment (based on RETH) with a dedicated consensus layer. Arc validators are a set of permissioned, institutional validators,. Transaction fees (gas) are denominated in USDC. Settlement is deterministic and sub-second with 0.5s blocks on testnet. Future privacy features will be opt-in and configurable.
Arc launches as a Proof-of-Authority (PoA) network on September 16, 2026, and plans to transition to a Proof-of-Stake (PoS) network in Phase 2 of its roadmap at a later date. Circle released its Arc litepaper in August 2025, and launched public testnet in October 2025. As of July 14, 2026, there have been over 607M transactions on Arc testnet. $ARC, the potential future native coordination asset of Arc to support network security, governance, network economics, and platform utility under a Proof-of-Stake model, is described in the May 2026 whitepaper but is not live. For an institution, Arc’s value is settlement it enables: USDC, a regulated stablecoin redeemable 1:1 for U.S. dollars deterministic finality, predictable fees, and a validator set with known, accountable operators.
Architecture
Arc runs as two separate clients that work together in every node:
- The consensus layer, built on Malachite (a Tendermint BFT implementation), orders transactions and finalizes blocks.
- The execution layer, built on Reth (a Rust Ethereum execution client), executes those transactions, maintains state, and serves a standard Ethereum JSON-RPC API.
The two communicate locally over IPC sockets on the same host, or over the Engine API when run on separate hosts. This separation lets each layer be optimized independently while the network delivers sub-second deterministic finality and full EVM compatibility. As of December 2025, testnet block production is tuned to a predictable 500ms blocks. Consensus finalizes in 100 and 300 milliseconds across a geographically distributed validator set.
Anyone can run an Arc node. A full node independently verifies every block against the validator signatures, re-executes every transaction to maintain its own copy of state, and exposes a local JSON-RPC endpoint. A full node does not propose or vote on blocks; it verifies finalized decisions rather than participating in consensus.
Validators are the subset of nodes that run consensus. They are professionally operated and run by institutional-grade teams such as Figment. Validators are permissioned: the set is composed of trusted, globally distributed operators to support secure and scalable onchain financial applications. This model allows Arc to meet the trust, security, operational, and compliance standards required of critical financial market infrastructure. The institutional consequence is a network anyone can verify independently, with consensus run by known and accountable operators rather than an anonymous validator set.
Integration with Circle infrastructure
Arc’s institutional advantages build on two pieces of Circle core infrastructure: USDC as the settlement and gas asset, and CCTP (Cross-Chain Transfer Protocol) for moving USDC between chains.
USDC as native settlement and gas
Fees on Arc are paid and settled in USDC, so an institution can forecast transaction cost in dollars rather than in a volatile native token. USDC gives Arc a dollar-denominated gas and settlement model that teams can evaluate more readily than a volatile gas token, wrapped dollar, or synthetic asset.
CCTP for canonical cross-chain movement
CCTP moves native USDC by burning it on the source chain and minting the canonical token on the destination chain, coordinated by an attestation. This helps reduce wrapped-asset bridge risk and the fragmented, chain-specific liquidity traditional bridges create. For institutions, this means Arc can participate in a broader multichain USDC environment where supported flows use canonical USDC rather than bridge IOUs. The flow below shows a representative transfer on Arc to or from another source chain.
Figure 2. Representative USDC settlement onto Arc through CCTP. Source: Circle Arc whitepaper (May 2026) and CCTP documentation.
Value by stakeholder
| Segment | Problem today | What Arc changes |
|---|---|---|
| Asset managers & RWA issuers | Tokenized funds and assets settle on rails not built for compliance or composability. | An open, EVM-compatible L1 with known institutional validators, USDC-denominated fees, opt-in confidentiality, and Circle-integrated infrastructure for issuance, settlement, and secondary activity. |
| Payment networks | Cross-border value moves through correspondent chains with multi-day settlement and pre-funding. | Sub-second deterministic settlement in USDC can reduce settlement latency, improve capital efficiency, and simplify reconciliation across supported payment workflows. |
| Banks & custodians | Public chains carry anonymous-validator and counterparty risk that fails internal controls. | A known institutional validator set, designed to support trust, security, operational, and compliance standards requirements |
| Treasury & FX desks | Gas-token volatility makes on-chain cost unforecastable; FX and settlement are separate steps. | Stablecoin-denominated fees give dollar-predictable cost; native FX features are planned on-platform. |
| Validator / infra operators | Standing up institutional-grade nodes for a permissioned chain carries real operational and compliance burdens. | Defined minimum operating standards and a simplified sentry-less footprint that lowers steady-state cost. |
Validator and network economics
Arc launches in Proof-of-Authority and is designed to transition toward Proof-of-Stake in a later roadmap phase. The validator set is permissioned at both phases. Operators like Figment are reputable, professional, well-known, legally accountable entities held to high standards of accountability and operational commitments. Validator selection criteria include but are not limited to: proven history of operational resilience, uptime guarantees, regulatory compliance, and security practices.
Managed Validator Operators (aka white-label validators) like Figment enable institutions to power an Arc validator, without taking on the operational lift or customer-facing brand risk. None of the institution or customer funds are exposed to “slashing” as we see in some proof-of-stake validator mechanics.
Working with a Managed Validator Operator enables institutions to get in early with Arc and keep their optionality as it grows, without engineering lift or on-going operations.Rewards during Proof-of-Authority
Validator rewards are paid in accumulated transaction fees (denominated in USDC) for any blocks the validator proposes. During PoA the transaction fee flow is simple: USDC transaction fees from users and applications accrue to the block proposer.
Rewards during Proof-of-Stake
The ARC token whitepaper contemplates a proof-of-stake design under which rewards flowing from two sources: inflation-funded issuance (estimated to be an initial annual rate of roughly 2–3%, declining on a governance-adjustable schedule) and transaction-fee-derived revenue. All protocol fees, using whatever asset users pay with, are converted to $ARC at the protocol level before the reward distribution. Rewards are split between validator operators, $ARC delegators, and a portion of $ARC is permanently burned. Validators may charge a commission; the majority of rewards go to delegators in proportion to stake.
Figure 3. PoS fee conversion and split (governance-mutable ratio). Source: Circle Arc whitepaper, May 2026.
Open questions
- ARC economics are to be determined
- The whitepaper does not specify validator commission caps, slashing parameters, or unbonding periods. PoA rewards are inferred from testnet transaction activity, which may not be representative of mainnet rewards.
- Validator Concentration during PoA
- Circle may initially control two-thirds or more of validator voting power; no single validator (with affiliates) may exceed one-third. Decentralization of the network is a stated end-state for Arc.
- $ARC token is not live
- Staking economics arrive at PoS.
- Operational dependencies
- Remote-signer third-party audits are still in progress and load testing on testnet was ongoing as of June 2026.
Figment’s participation as an Arc genesis validator and the opportunity
Figment is ready as a genesis, day-one validator operator and infrastructure provider for Arc. We were the first third-party validator to join Arc’s testnet in late March 2026. Our validators meet Circle’s eligibility, security, and compliance standards.
Arc is designed to give partners and institutions a settlement layer they can underwrite. Arc’s advantages include: USDC gas fees and settlement, deterministic finality, and a permissioned validator set with real accountability. Institutions send and receive in canonical USDC end-to-end.
Figment firmly believes Arc is positioned strongly to attract and increase institutional settlement on Circle’s infrastructure. Arc provides its partners a meaningful settlement advantage for payments, lending and RWA issuance. The opportunity for our partners is to secure a permissioned, institutional L1 from launch and to participate in its economics as they mature from PoA fee-reward flows to PoS staking rewards. Figment is happy to engage now and shape validator participation before mainnet and the PoS transition.
