A New Chapter in Stablecoin Innovation
The U.S. company behind the world’s second-largest stablecoin, USDC, Circle, has set plans in motion for launching Arc. More importantly, Arc is a brand new Layer-1 blockchain that aims to power the stablecoin-driven finance of the future.
With its Q2 earnings announcement on Tuesday, the company describes Arc as an “enterprise-grade foundation” for payments, foreign exchange (FX), and capital markets applications. The public testnet is expected to debut later this year.
In a first for a project of this size, USDC will serve as Arc’s base gas token, so users can pay fees in stablecoins rather than volatile tokens.
Purpose-Built for Stablecoin Finance
As Circle notes, Arc is “purpose-built for stablecoin finance” and represents a major milestone in delivering a full-stack platform for the internet financial system.
Arc will feature:
- Easily swap stablecoins without leaving the network using an integrated stablecoin FX engine.
- Near-instant confirmation for payments and trades.
- Flexible privacy options for sensitive transactions.
Circle’s new blockchain will work with a wide range of other networks and blockchains already in use today. Overall, USDC will still remain the biggest player.
At present, USDC boasts a $65.6 billion market cap, running on 24 blockchains — with Ethereum holding the largest share at $42.6 billion in supply.
Strong Revenues, Heavy IPO Costs
In the second quarter, Circle’s total revenue and reserve income increased 53% year-over-year to $658 million. The company reported a net loss of $482 million, mainly due to $591 million in non-cash IPO-related charges.
This included $424 million in stock-based fees and a $167 million uptick in convertible debt valuation as Circle’s stock skyrocketed after its June 5 IPO.
Circle’s stock opened at $69, peaked at $292.8 on June 23, and recently cooled to $161.2 — still more than double its debut price.
The New Blockchain Arms Race
Delta’s first report puts Circle at the center of a growing blockchain development sprint between crypto-native and traditional finance players:
- Stripe is partnering with crypto VC firm Paradigm to launch a new network called Tempo.
- Robinhood has launched its own Layer-2 blockchain for tokenization.
- In June, Shopify launched early payment support for Coinbase’s Base in USDC.
With Arc, Circle could redefine the rails of global finance — impacting both the crypto space and traditional payments alike.
