The ARC mainnet is expected to launch in the summer of 2026.

Written by: Maher, Foresight News

On May 11, Circle released two major announcements: financial results for Q1 2026 and the presale and white paper release for the ARC network's native token. The ARC token completed a presale of $222 million at a valuation of $3 billion, led by a16z crypto, with investment participation from top-tier institutions including Apollo Funds, ARK Invest, BlackRock, Bullish, General Catalyst, Haun Ventures, Intercontinental Exchange, IDG Capital, SBI Group, and Standard Chartered Ventures.

The Q1 financial data only proved that USDC already has sufficient scale and traffic to serve as a foundation, while the ARC white paper provided a clear technological path, token economics, and ecological vision. After the mainnet is expected to launch in the summer of 2026, ARC will convert USDC’s stagnant currency and traffic infrastructure advantages into new cyclical income sources such as network fee sharing, governance participation, and AI economic services. The significance of this transformation lies in: stablecoins will no longer be a "bridge tool" in the crypto world but will become the foundational currency of internet finance, with ARC serving as the underlying operating system to facilitate this upgrade.

Reserve Income + On-Chain Settlement Dual Drivers

Circle's total revenue and reserve income for Q1 2026 reached $694 million, a year-on-year increase of 20%. Of this, reserve income contributed $653 million, up 17% year-on-year. Although the interest rate environment caused reserve yields to fall by 66 basis points, the average circulation of USDC grew by 39% compared to the same period last year, directly offsetting the yield pressure and becoming the main driver of revenue growth. Other income reached $42 million, an increase of $21 million year-on-year, primarily from subscription services and trading-related revenue.

Operational metrics are even more compelling: at the end of the quarter, USDC circulation stabilized at $77 billion, a year-on-year increase of 28%; on-chain transaction volume skyrocketed to $21.5 trillion, a year-on-year surge of 263%. According to on-chain analysis data from Visa, USDC accounted for 63% of stablecoin transaction volume during Q1. The Arc testnet, which launched on October 25, 2025, until March 31, 2026, has processed a total of 244.1 million transactions; CPN Annualized Transaction Volume reached $8.3 billion, a quarter-on-quarter growth of 17%.

On the profit side, the net income from ongoing operations was $55 million, a 15% year-on-year decrease, but adjusted EBITDA recorded $151 million, a 24% year-on-year increase. Operating expenses rose to $242 million, up 76% year-on-year, mainly due to stock compensation post-IPO, increased taxes, and strategic investments in products, distribution, and operational infrastructure. Circle clearly stated in the financial report that the decline in net income is a normal result of growth investments, while the strong growth in EBITDA proves the healthy cash flow generation capacity of its core business.

These figures are not isolated performance highlights but are the most direct support for the implementation of the ARC strategy. Without the 28% growth in USDC circulation and the 263% explosion in transaction volume, ARC's positioning as a "stablecoin native Layer 1" would lack a real user base and liquidity. The financial report confirmed that Circle's "reserve income (currency monetization) + on-chain settlement (traffic infrastructure)" dual-driver model has been successfully validated, which is the core confidence behind ARC's ability to attract top institutions with a $3 billion high valuation.

ARC White Paper Published, Circle Acquires 25% of Total Supply

On May 11, the concurrently released ARC white paper clearly defined the positioning of the Arc network: it is a stablecoin-native Layer 1 blockchain created by Circle, aiming to become the "operating system for the internet's economy." This fundamentally differentiates it from the vast majority of generic public chains on the market—Arc is deeply optimized around stablecoin-native financial activities from the underlying architecture, rather than simply layering stablecoin support onto existing chains.

Specifically, Arc focuses on addressing core pain points in institutional-level and large-scale adoption scenarios. It provides predictable fees, certain settlements, compliance and privacy protection, and supports enterprise-level contracts, governance mechanisms, AI agents, and USDC-driven value transfers. This design allows Arc to achieve true native integration with Circle's full stack of products (USDC, CCTP, Gateway, etc.), significantly reducing friction costs for institutional users in compliance, cross-chain, and settlement efficiency.

Circle's CEO Jeremy Allaire emphasized in the earnings call that 60% of the initial supply of ARC tokens will be used for the ecosystem, specifically including token sales, developer incentives, airdrops, and other network growth plans.

The initial supply of Arc is 10 billion tokens, of which Circle receives 25% to operate validator infrastructure and earn staking income; 60% is allocated to network builders and users; the remaining 15% is earmarked for long-term reserves. The 60% ecosystem share will specifically be used for token sales, developer funding, network growth plans, etc. The ARC token has five core functions, including staking, fee reduction, fee capture, and governance decisions. The initial annual inflation rate is set at around 2-3%, mainly to incentivize validators to participate in network security, and will gradually decline according to a programmed mechanism.

The greatest strategic value of ARC lies in its precise filling of the infrastructure gap of stablecoins in institutional scenarios. With the current regulatory environment becoming increasingly clear and strong willingness for institutional participation, Arc's compliance modules, certain settlements, and connection capabilities with RWA are just what traditional public chains lack in these scenarios.

Combined with the Agent Stack launched by Circle at the same time, developers can create, fund, and monetize AI agent activities using USDC on Arc, while Arc's enterprise-level contract capabilities and certain settlements provide a trustworthy and compliant execution environment for AI + blockchain economic activities. This closed-loop design makes ARC one of the infrastructures with significant landing potential in the wave of AI and blockchain integration.

Is a $3 Billion Valuation Expensive?

Since the release of Circle's financial report, its CRCL stock price surged to $131.76, nearing the highs of March this year, with its total market capitalization at $32.57 billion.

The capital market has shown interest not only in its US stock target but also in its ARC token, which completed a $222 million presale at a $3 billion valuation, with the collective entry of institutions like a16z crypto and BlackRock not just indicative of simple capital pursuit, but a deep recognition of Circle's ARC strategy.

What these institutions see is the scarcity of Arc in the stablecoin native track. The explosive growth of USDC's on-chain transaction volume by 263% in Q1 has proven that real demand exists, while Arc provides the underlying upgrade path on the supply side.

ARC's competitive moat is particularly evident.

Compared to generic Layer 1s, Arc has forsaken the "omni-capable" route, instead focusing on the extreme optimization of stablecoin-native financial activities, creating differentiated advantages in fee predictability, settlement certainty, and compliance privacy, especially suitable for high-value scenarios such as institutional RWA, large payments, and AI agents.

In comparison to Coinbase, Circle has built a complete closed loop of "issuance—circulation—infrastructure" with USDC + Arc; compared to Tether, Circle's years of compliance accreditations and USDC reserve transparency make Arc easier to gain the trust of traditional financial institutions.

The participation of traditional financial giants like BlackRock and Apollo essentially bets that Circle is upgrading stablecoins from a "cryptocurrency trading bridge" to the "foundational currency of internet finance," with ARC being the core vehicle for this upgrade.

However, there is still considerable debate about whether the ARC valuation is expensive.

Backed by USDT, Plasma currently has a market capitalization of $1 billion, and the FDV of ARC's presale is directly nearly 3 times the current market FDV of XPL.

From an absolute number perspective, ARC does seem "expensive"—XPL has been operating on the mainnet for nearly 8 months (launched in September 2025), with TVL once exceeding $5 billion, handling massive USDT retail payments and cross-border transactions. Previously, XPL was highly anticipated, triggering a significant wealth effect myth; however, when the feast is over, someone has to pay the bill, and the selling pressure brought by high inflation + large ecosystem unlocks has caused the token price to drop more than 10 times from its peak.

ARC's $300 million FDV may not be a bubble, but rather a reasonable premium paid by institutions for being a "top player in stablecoin infrastructure." XPL, with an approximately $1 billion FDV, is priced as a "verified retail payment public chain," while ARC, with a valuation 3 times higher, is priced as an "institutional operating system yet to launch but with a deeper moat and clearer monetization pathway."

Whether the crypto secondary market accepts such a premium may be answered by this summer.