Circle has launched Arc, its own Layer 1 blockchain dedicated to payments, tokenized assets, and institutional finance. This EVM-compatible chain allows transaction fees to be paid directly in USDC with no volatile gas token, and guarantees finality in under one second through the Malachite consensus engine. Circle generated $1.68 billion in revenue in 2024, almost entirely from interest on USDC reserves held in US Treasury bills, exposing the company to fluctuations in US interest rates. Facing competition from Tether, Stripe, Google, and JPMorgan, each developing their own payment rails, Circle is diversifying its revenue streams and targeting transaction fees on Arc as a new growth lever. The $74 billion in USDC in circulation remains primarily hosted on Ethereum, Solana, and Base, and Arc will need to attract real flows such as payroll and interbank settlements to compete with Treasury bill yields.
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