Circle's darling Arc is going to issue coin, can retail investors get a share?

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Original author: 1912212.eth, Foresight News

On November 12, stablecoin issuer giant Circle released its third-quarter business update, revealing that it is exploring the issuance of native tokens on its newly launched stablecoin public chain, Arc.

Circle is poised to transition from a mere stablecoin provider to a more comprehensive blockchain ecosystem builder. As the issuer of USDC, this move by Circle may further strengthen its leadership position in the stablecoin financial sector while injecting new vitality into the Arc network.

The Arc launched by Circle is a stablecoin public chain. It is not a general-purpose public chain like Solana or Sui, but a platform optimized for stablecoin payments, foreign exchange, and capital markets.

Arc Network, launched by Circle, is an L1 blockchain project primarily led by Circle's executive leadership team, reflecting the stablecoin giant's expertise in the blockchain infrastructure space. Circle's CEO is Jeremy Allaire, who also serves as a co-founder of Arc, responsible for the company's overall strategy, vision, and operational execution.

The chief product manager is Sanket Jain, who is also the chief product manager of Circle and a co-founder of Gateway. He graduated from Cornell University with a degree in Applied Economics and previously worked as a financial analyst at Fountain Financial, LLC, and focused on corporate restructuring analysis at Houlihan Lokey. The chief software engineer is Adrian Soghoian, who has worked at Trigger Finance and Google’s Chrome. He has many years of development experience.

The core innovation of Arc lies in embedding USDC at the network's base layer, avoiding the volatility issues associated with traditional Gas tokens. Users can directly pay fees with USDC, achieving a seamless stablecoin trading experience. In August this year, Circle Internet Group (CRCL) acquired Informal Systems' high-performance consensus engine Malachite, adopting a permissioned Proof-of-Authority mechanism, with validator nodes served by known authoritative institutions.

At the end of October, Arc launched its public testnet and opened it up to developers and enterprises. Currently, over 100 institutions are participating. The Circle Payments Network has connected 29 financial institutions; and new collaborations have been established with Brex, Deutsche Börse, Finastra, Fireblocks, Kraken, Itaú, and Visa.

Circle Internet Group's third-quarter financial report shows that the company's revenue increased by 66% year-on-year, reaching approximately $740 million, with a significant boost in net profit. This strong performance is attributed to the surge in USDC circulation—by the end of the reporting period, USDC's market capitalization had exceeded $75 billion, making it the second-largest stablecoin in the world, only behind Tether's USDT.

Against the backdrop of a tightening global regulatory environment, Circle's compliance advantages are particularly prominent, with its USDC having received recognition under the EU MiCA regulations and being widely used in several mainstream exchanges and DeFi protocols.

Unlike traditional blockchains, Arc uses USDC as its native gas token, which means transaction fees can be paid directly in USDC, enabling instant settlement and privacy options. The network is EVM-compatible, making it easier for developers to migrate applications, and has deep integration with Circle's ecosystem, including tools like USDC, CCTP (Cross-Chain Transfer Protocol), and Gateway.

In the Q3 report, Circle clearly stated: “We are exploring the possibility of issuing a native token on the Arc network, which will enhance network participation, drive adoption, further align the interests of Arc stakeholders, and support the long-term growth and success of the Arc network.”

This statement is still in the “exploration” stage, but it is enough to stimulate the market's imagination.

Why issue tokens?

In the stablecoin market, Tether, as the issuer of USDT, is actively building a dedicated blockchain ecosystem through the launch of Plasma and Stable networks, which directly encourages Circle to accelerate its exploration of native token issuance on the Arc network to maintain its competitive advantage.

The Tether-supported stablecoin public chain Plasma is optimized for USDT payments, supporting zero-fee USDT transfers and EVM compatibility. Its token launch and deposits have attracted countless investors, generating significant popularity. Currently, its token XPL has a market cap of 490 million, with an FDV of 2.6 billion dollars. Another stablecoin public chain supported by Tether, Stable, has also attracted a massive influx of funds after opening deposits. The first phase with a limit of 1 billion dollars was quickly filled, and the second phase limit of 500 million was also lifted due to high participation, resulting in total deposits nearing 1.8 billion in the second phase.

Tether firmly occupies a dominant position in the market with the expansion of its stablecoin public chain, exchanges, and trading pairs. USDC is still in a catch-up role.

U.S. Treasury Secretary Bessent stated today that by 2030, the scale of stablecoins could grow from $300 billion to $3 trillion, an increase of 10 times.

The market is also very receptive to the narrative of stablecoin public chains. Previously, USDE's market value surged to nearly 15 billion USD in just 2 years, and subsequently, many stablecoins have emerged along with public chains and DeFi protocols.

Circle is listed in the United States, and it can only meet the investment needs of American investors, but it does not satisfy the needs of its native community. The native token is a true killer feature that attracts attention in the community.

It not only helps attract more community participants and incentivizes network participation, but also enhances the adoption of Arc. Circle emphasized in the report that this token will “drive network growth,” suggesting it may be linked to the USDC ecosystem, forming a closed-loop economic model. With the addition of the native token, this ecosystem will become more attractive, greatly appealing to DeFi, RWA (real-world assets), and cross-border payment applications.

Arc's native token can address the pain points of current stablecoin networks, such as high gas fees and cross-chain fragmentation. With governance incentives, Arc could become the preferred platform for RWA and DeFi, attracting funds from institutions like BlackRock—Circle has collaborated with BlackRock on the USDC fund.

In addition, under the trend of the integration of AI and Web3, Circle's AI tools combined with tokens can accelerate the development of the developer ecosystem. In terms of challenges, issuing tokens requires a balance between centralization and decentralization. Currently, Arc's permissioned design may limit community participation, and if the token design is improper, it may lead to speculative bubbles. The market competition is fierce: L1s such as Solana and Base are already mature, and Arc needs to prove its exclusive advantages with stablecoins.

In the long term, this exploration aligns with the evolutionary trend of blockchain: transitioning from a general platform to a vertical ecosystem. Circle's Q3 profit growth proves the sustainability of its business model, and the native token will be the catalyst.

Currently, participants can receive test coins on the testnet, and they can participate by deploying contracts on the testnet. The official detailed tutorial document has been released.

Previously, Plasma and Stable deposits attracted countless participants, and now with Coinbase launching its new platform and announcing the first project as Monad, it remains unknown whether ARC will also open ICO quotas.