What is Arc? The economic OS for the internet, explained for developers

Arc is an open, EVM-compatible blockchain built around the world's financial markets, stablecoin-native applications, and agentic economic activity. Arc uses stablecoins as gas, starting with USDC, its finality is deterministic, and some contracts that run fine on Ethereum revert on it. This guide covers what Arc is, how the unusual parts work, and what you need to know before you build on it.

What is Arc?

Arc is a Layer-1 blockchain built by Circle, the issuer of USDC, and designed for real-world financial flows. It is EVM-compatible, uses stablecoins as gas starting with USDC, finalizes transactions in under a second, and is validated by a permissioned set of regulated financial institutions.

Circle announced Arc in August 2025, arguing that existing chains were not designed with stablecoins in mind, so stablecoin businesses inherit volatile gas tokens, probabilistic finality, and public-by-default transfers.

What makes Arc different from other EVM chains?

Four design choices do most of the work:

• Gas is a stablecoin, starting with USDC. Fees are dollar-denominated and targeted at around a cent per transaction, so a business can budget transaction costs without holding a volatile token.
• Finality is deterministic. Arc runs Malachite, a Tendermint-family BFT engine, with sub-second finality and no reorganizations by construction. A transaction is either pending or final. Confirmation counts, the reorg heuristic every exchange integration carries, stop mattering.
• FX is built in. StableFX, an RFQ-based FX engine for converting between stablecoins, is live on testnet as a protocol feature rather than a DEX someone deployed.
• Privacy is planned, not shipped. Circle lists privacy capabilities in the mainnet launch suite, but the docs still mark the Arc Privacy Sector, a confidential execution environment for Solidity contracts, as roadmap. Treat confidential transfers as coming, not day-one.

How does USDC as gas actually work?

There is one USDC balance per account, viewed through two interfaces. The native view has 18 decimals and is what gas accounting and msg.value use. The ERC-20 view, at a fixed system contract address, has the 6 decimals you know from USDC on every other chain and is what transfer and approve use. Moving one moves the other, because they are the same balance. There is no wrapped token, and the docs explicitly tell you not to deploy one.

The fee market looks like EIP-1559 but behaves differently. Instead of recalculating the base fee every block, Arc adjusts it against a smoothed average of recent block utilization, which keeps fees stable through short bursts. The base fee is not burned; it goes to the block producer.

Gas sponsorship works the way it does on other EVM chains for now. Protocol-level paymasters and multi-stablecoin gas are documented as planned but not supported at launch, while ERC-4337 account abstraction works today. Our Bundler API and gas sponsorship both run on Arc Testnet.

What else is in the Arc ecosystem?

Arc ships wired into the rest of Circle's developer stack, and most integrations touch at least one of these:

• CCTP moves USDC in and out. Every USDC on Arc arrives through Circle's cross-chain transfer protocol as the native asset, and transfers out of Arc are attested in about a block.
• Gateway gives apps one USDC balance across chains. Deposit once, then mint on a supported chain in under 500 milliseconds without waiting for source-chain finality.
• App Kit handles bridging and wallets. Bridge Kit wraps the burn-attest-mint flow in a single call, with adapters for viem, ethers, Solana, and Circle Wallets.
• CPN connects onchain settlement to bank payouts. The Circle Payments Network links financial institutions for cross-border payments, with native Arc support planned.
• The Agent Stack points AI agents at all of it. Circle's agent tooling settles x402 agent payments in USDC, and Arc's docs ship an MCP server agents can read directly.

What could break when you port a contract to Arc?

Arc targets a current Ethereum fork baseline, and Solidity, Foundry, Hardhat, and viem work unchanged (viem even ships Arc Testnet as a built-in chain). The differences are in runtime behavior rather than tooling. Read the EVM differences page in full before you deploy real value; these are the ones most likely to break existing code:

• PREVRANDAO always returns 0. Any contract using it for randomness silently loses its entropy source. Use a VRF.
• Burning USDC is forbidden. A value transfer to the zero address reverts, and so does a transfer to a self-destructed account, which succeeds on Ethereum. Sweep and distribution contracts that assume transfers to any address go through need a second look.
• The USDC blocklist runs at the protocol level. A transfer touching a blocklisted address reverts at runtime and still consumes gas. The testnet seeds a known blocklisted address so you can test the revert path.
• Every native transfer emits a log, and ERC-20 transfers emit two. Arc adopts EIP-7708, so native USDC movements emit a Transfer event from a system emitter at 18 decimals, while ERC-20 calls also emit the familiar 6-decimal event. An indexer that does not match on the emitter address will double-count every transfer.
• Blocks can share timestamps. At sub-second block times, block.timestamp is non-decreasing rather than strictly increasing. Order by block number.
• No blob transactions, and local simulators cannot reproduce Arc's precompiles or blocklist behavior. Test against a real Arc endpoint rather than a local fork.

What can you build on Arc today?

Arc Testnet is open now, and mainnet launches September 16, 2026. Chain ID for testnet is 5042002, gas is testnet USDC from Circle's faucet, the explorer is Blockscout-based, and the standard Foundry deploy-and-verify flow works end to end.

The docs are agent-friendly, shipping a hosted MCP server and an llms.txt index that a coding agent can read natively. That fits the rest of Circle's stack, which already settles most x402 agent payments in USDC.

Build on Arc with Alchemy

We will support Arc mainnet on day one, including WebSockets for real-time streams, alongside JSON-RPC, the Debug API, the Bundler API, and gas sponsorship for smart-account flows. We are one of the node providers listed in Arc's own docs, and Arc Testnet is live on our platform today.

Create a free app in the dashboard and build against testnet now. When mainnet opens on September 16, switching is an endpoint change on the same Arc surface. No contracts, no waitlist, no minimum commitment.