Key Takeaways
Circle is set to unveil Arc, a layer 1 blockchain specifically designed for stablecoin transactions and capital market activities. The platform will utilize USDC as its primary gas token, with a focus on facilitating compliant and instantaneous cross-border payments.
Circle Introduces Arc for Stablecoin Finance
Circle Internet Group, known for issuing the USDC stablecoin, has revealed its intention to launch Arc, a novel EVM-compatible layer 1 blockchain aimed at advancing stablecoin finance and tokenized assets. This announcement coincided with the release of the company’s earnings report for the second quarter. As detailed in Arc’s litepaper, the new network will leverage USDC as its native gas token, providing rapid settlement times, optional privacy features, and seamless integration with Circle’s existing services.
Arc: A New Era for Stablecoin Transactions
Arc is positioned as a dedicated layer-1 blockchain that aspires to foster a new wave of financial innovation centered around stablecoins. Tailored to establish a robust infrastructure for payments, foreign exchange, and capital markets, Arc promises to deliver significant advantages, including USDC-based transaction fees that eliminate the unpredictability associated with volatile native tokens. Users can expect final and irreversible settlements in under one second, along with confidential transfers that obscure transaction amounts while ensuring address visibility.
Facilitating Global Financial Operations
According to the litepaper, Arc is designed to be a central hub for stablecoin liquidity and applications. With its rapid finality and the integration of USDC as the gas token, users will be able to effortlessly access a variety of applications across multiple blockchains via Circle’s Cross-Chain Transfer Protocol (CCTP) and Gateway. The platform aims to streamline cross-border payments, foreign exchange activities, capital markets, and the tokenization of real-world assets, all while adhering to legal compliance frameworks, potentially establishing itself as a crucial settlement layer for the global financial landscape.
Upcoming Launch and Features of Arc
Circle intends to roll out Arc’s public testnet in the upcoming fall, followed by a beta version of the mainnet. This will include essential features such as the core fee architecture, sub-second finality, and an FX engine roadmap, alongside integration with Circle’s broader suite of products. Future updates are expected to introduce confidential transfers, mechanisms to mitigate Miner Extractable Value (MEV) like encrypted mempools and batch processing, as well as a governance model based on permissioned proof-of-stake to enhance validator participation.
Circle’s Financial Performance in Q2 2025
In its second-quarter earnings report, Circle announced revenues of $658 million, with USDC circulation climbing to over $61 billion, marking a 90% increase compared to the previous year. Despite this revenue growth, the company faced a net loss of $482 million, largely attributed to $591 million in non-cash charges related to its IPO, which included $424 million in stock-based compensation and a $167 million rise in convertible debt value. Adjusted EBITDA saw a 52% year-over-year increase, reaching $126 million.
Significance of Circle’s IPO
“Circle’s successful IPO in June represented a crucial turning point—not just for our organization, but also for the broader acceptance of stablecoins and the evolution of a new internet financial system,” remarked Jeremy Allaire, Co-Founder, Chief Executive Officer, and Chairman at Circle. The company completed its $1.2 billion initial public offering in June, yielding $583 million in net proceeds after accounting for $12.8 million in offering expenses.
Operational Highlights and Partnerships
Key operational metrics indicate that USDC now holds a 28% share of the entire fiat-backed stablecoin market. During the quarter, Circle minted over $42 billion in USDC, while redemptions reached $40.8 billion. In addition, Circle launched its Payments Network in May, establishing four active payment corridors and engaging over 100 financial institutions. The company has also forged new partnerships with industry leaders such as Binance, Corpay, FIS, Fiserv, and OKX.
