Ark official website
Hashed
Circle, the issuer of USD Coin (USDC), the world’s second-largest dollar stablecoin, will unveil its own Layer 1 blockchain “Arc” in September. What draws attention is that it has been designed so that transaction fees (gas fees) are paid in USDC. Analysts say this signals that stablecoin competition is expanding beyond a simple issuance race into a competition over blockchain infrastructure.
According to the blockchain industry on the 8th, Circle will launch the Arc mainnet on September 16. Arc is designed to have transaction fees paid in USDC. This is the biggest difference from the existing method of using a blockchain’s native token for gas fees.
Currently, most blockchains require users to separately hold the chain’s native token to make transactions. For example, to send USDC based on Ethereum, one must have not only USDC but also Ethereum (ETH) for transaction fees. Users had to manage multiple types of tokens, and companies also bore the burden of separately holding highly volatile virtual assets.
Circle plans to change this structure through Arc. Arc’s official website explains that “transaction costs are charged on a USDC basis, so users are not exposed to volatile gas tokens and can predict costs (Predictable, dollar-based transaction costs).” This means users can handle both payments and fee payments with USDC alone, and companies can manage infrastructure costs on a dollar basis.
The true significance of Arc does not lie only in improved user convenience. This is because it is structured so that the more transactions occur based on the Arc blockchain, the more demand for USDC to pay gas fees also increases. This vision took shape starting last year. In August last year, Circle first unveiled the Arc project, presenting a structure that uses USDC as the network’s base currency. After about a year of development, it will present the mainnet next month.
A similar attempt has followed in Korea. In January this year, about five months after Circle announced the Arc blueprint, Hashed Open Finance unveiled its plan for a Layer 1 (L1) blockchain “Maru” that uses a won stablecoin for gas fees.
According to the Maru whitepaper, Maru pays all gas fees in won stablecoin. This is to allow companies to reflect infrastructure costs in their budgets on a won basis without separately holding volatile tokens. In addition, as the ecosystem grows and transactions increase, demand for and circulation of the won stablecoin to pay gas fees naturally increase as well.
The two projects share a common direction in that they use the currency used for payments directly for network fees as well. They are also similar in that they create an economic structure in which demand for stablecoins to pay gas fees grows as blockchain usage increases. Analysts assess this as an attempt to expand stablecoins beyond being a simple means of payment into a base currency that powers blockchain networks.
What is interesting is that Kakao stands at the intersection of the two projects. Kakao Pay is reportedly in discussions with Hashed to form a won stablecoin consortium. Last month, Kakao, Kakao Pay, and Kakao Bank signed a strategic memorandum of understanding (MOU) with Circle to build blockchain-based payment infrastructure. At the time, Dante Disparte, Circle’s Chief Strategy Officer (CSO), said, “Circle’s technology can connect won stablecoins to the global digital finance network.”
Ultimately, stablecoin competition is moving beyond a race over issuance volume into a race over infrastructure. Analysts say that going forward, competitiveness will be determined less by how many stablecoins one issues and more by who builds the blockchain ecosystem in which those stablecoins are actually used.
