Circle's second growth curve: After $222 million in financing, is CRCL still ARC?

Author: Zhou, ChainCatcher

On May 11, Circle announced that its public chain Arc's native token ARC completed a $222 million presale while releasing its Q1 2026 financial report, with a fully diluted valuation of $3 billion.

Among them, a16z crypto led the investment with $75 million, followed by first-tier institutions such as BlackRock, Apollo, the parent company of the New York Stock Exchange ICE, SBI Group, Standard Chartered Ventures, and ARK Invest.

The CRCL stock price surged nearly 16% that day, with its market capitalization recovering to over $30 billion.

Image source: RootData

This raised a core question in the market: Circle is already a publicly traded company. If it is optimistic about its future, it can directly hold CRCL stock. Why issue the ARC token? Both are capturing the value of the Arc network, but what does each represent?

1. Why Circle Built Arc

Why did Circle choose to build its own public chain instead of continuing to issue and use USDC on Ethereum or Solana, consuming significant resources?

a16z Crypto explained that as global finance gradually moves on-chain, only a few public chains will be able to support the "on-chain economic system foundation" in the future.

The trading volume of stablecoins approached $9 trillion last year, on par with global payment networks like Visa and PayPal. Cross-border payments, B2B settlements, and foreign exchange trading are becoming core scenarios for stablecoins, which have upgraded to the core layer of global financial infrastructure.

However, existing blockchain infrastructure mainly caters to crypto-native users and individual developers, lacking native support for large institutional needs.

Industry insiders pointed out that institutions face several core pain points when conducting business on-chain, including the need for a complete on-chain and off-chain closed-loop verification for asset issuance and redemption, the need for certainty in payment finality, compliance capabilities that must be pre-embedded at the base level, configurable privacy protection, and predictable Gas costs using USDC.

These needs are difficult to meet natively by existing public chains like Ethereum and Solana.

For Circle, the company has primarily relied on USDC reserve interest for profit, with USDC circulation reaching $77 billion in Q1, a 28% year-on-year increase. As the business scale continues to expand, relying solely on existing public chains can no longer fully match the deep needs of institutional clients.

Therefore, Circle launched Arc, one of its core purposes being to fill this gap. The circulation of stablecoins on others' chains does not mean that the financial aspect of stablecoins belongs to them—this is the underlying logic behind Circle's decision to build its own L1.

Image source: X user @vanisaxxm

2. USDC Solved Transaction Issues, ARC Solves Coordination Issues

Since USDC is already the Gas token of Arc, why issue an ARC token?

USDC has effectively addressed the stability issues at the transaction level. Institutions can pay fees directly in dollars, with predictable costs that can be accounted for, avoiding the troubles caused by the price volatility of crypto assets for finance departments.

However, to ensure the long-term healthy operation of the network, merely solving transaction issues is not enough; coordination issues also need to be addressed.

According to the official white paper, Arc will gradually transition from PoA to PoS. Verification nodes need to stake assets to ensure network security, and the core of staking is to bind node behavior with economic interests; any wrongdoing will face penalties. The value of USDC remains constant at $1, which cannot truly bind the success or failure of nodes to the network; only the native token ARC can provide such dynamic economic incentives.

Governance also requires interest binding. Key decisions such as fee rates, inflation parameters, and burn ratios need participants to consider from a long-term perspective. If voting is done solely with USDC, holders may lack sustained motivation and can exit after voting. The asset value of ARC holders is directly linked to network performance, providing a stronger incentive to make choices beneficial for the long-term development of the network.

The white paper also clarifies that the governance rights of ARC have phased boundaries. Economic parameters are decided by token holders' votes, but important matters such as protocol upgrades, security incident handling, and verification node qualification reviews will initially remain under Circle's control, gradually decentralizing as the governance mechanism matures.

In simple terms, USDC is the blood of the Arc network, responsible for daily efficient flow; ARC is the equity of the network, responsible for binding various interests together in the long term. This dual-token design also allows the cost of ecological construction to shift from Circle's fixed cash expenditure to incentive arrangements linked to the success or failure of the network.

3. CRCL and ARC, What Cake Are They Each Eating?

In this way, Circle holds both the publicly traded equity CRCL and the network's native token ARC, both capturing the value of the same Arc network. So, what cake is each of them eating?

According to the white paper, the total supply of Arc is 10 billion ARC tokens, with a clear distribution ratio: 60% for the ecosystem, including developer incentives, network growth plans, and user participation rewards; 25% belongs to Circle for operating verification nodes, staking, and governance; and 15% as long-term reserves for network stability and strategic flexibility.

In terms of fee mechanisms, all protocol fees on Arc, regardless of the asset used by users for payment, will be fully converted to ARC at the protocol layer, with a portion permanently destroyed and a portion allocated to stakers and validators. The more active the network, the stronger the value capture of ARC.

CRCL shareholders primarily profit through Circle at the company level. The company continues to enjoy the core income from USDC reserve interest, as well as revenue from other business growth such as the payment network CPN. Meanwhile, Circle holds 25% of ARC, allowing it to indirectly share in the network-level rewards.

Crypto analyst BTCdayu proposed a three-dimensional valuation framework to understand CRCL: the first dimension is reserve interest income, which is currently the most stable cash flow and forms the valuation floor; the second dimension is payment network income, which is expected to approach a Visa-like network fee model as the CPN scale expands; the third dimension is the network option value brought by Arc, reflecting the market's expectations of Circle's transformation from a stablecoin issuer to a financial infrastructure platform.

In simple terms, CRCL captures the company's overall stable cash flow and existing business growth, while ARC captures the growth elasticity at the network level, including Gas fee conversion, ecological expansion, and long-term network effects.

The two form a clear dual-track structure. The more successful the Arc network, the greater the usage of USDC and the stronger the business synergy, benefiting Circle at the company level; at the same time, the value of the ARC token rises, and Circle's 25% share will also appreciate, ultimately benefiting CRCL shareholders.

However, the two are completely independent at the legal level. The official statement mentions that ARC does not represent Circle's equity and does not grant any claims on Circle's income, profits, assets, or CRCL shares. This means that ARC holders do not have the fiduciary responsibility protection of public company shareholders, and their returns depend entirely on the actual adoption of the network and the design of the token economics.

4. How Ordinary Users Can Participate

After clarifying the value distribution of CRCL and ARC, a practical question arises: who exactly will the ARC token be sold to? How can ordinary users participate at low cost?

The first type of buyer is institutional strategic investors. They entered through the $222 million presale at a unit price of $0.30, with lock-up periods ranging from 1 to 4 years. These institutions not only provide funding but are also mostly potential users and builders of Arc. For example, BlackRock has been testing tokenized asset settlement on the testnet, while ICE, as the parent company of the New York Stock Exchange, and SBI Group, one of Japan's largest financial groups, are both preparing to conduct business on Arc in the future.

The second type consists of ecosystem builders and long-term holders. Developers and liquidity providers earn ARC incentives through contributions, with 60% of the ecosystem allocation prepared for this purpose. They are more focused on the long-term growth of the network, similar to early employees holding company equity.

The third type includes retail speculators and participants. They are interested in early narrative opportunities and ecological incentives, expecting price elasticity after the mainnet launch.

For ordinary users who do not qualify for the presale, Arc offers several low-cost participation paths.

The Arc Testnet was launched in October 2025 and has processed over 244 million test transactions to date, with the mainnet expected to go live in the summer of 2026. Users can receive test tokens for free and perform operations such as Swap, Bridge, and contract deployment to familiarize themselves with network interactions.

The Arc House community is the main entry point for ordinary users to participate. Users can accumulate points by registering in the community, staying active, posting, reading content, and participating in Q&A. Accepted answers will earn additional points.

Advanced methods include content contributions, video sharing, event organization, and even hosting offline Meetups. Additionally, users with teams or products can apply for Circle Developer Grants.

It should be noted that Arc House points are only recognition of community contributions and do not have monetary value, nor do they guarantee any specific rights distribution; specific rules are subject to the latest announcements from the official.

Conclusion

Currently, competition in the institutional on-chain track is fierce, and Arc is not the only player.

Digital Asset, which owns the Canton Network, is completing a new round of financing at a valuation of about $2 billion, led by a16z crypto; Plasma positions itself as a native settlement for stablecoins, with a relatively more attractive valuation; Visa has included projects such as Arc, Canton, Plasma, Base, and Tempo in its stablecoin settlement testing points since April. This indicates that the track is still in a phase of parallel and competitive development among multiple players.

In this context, Arc's $3 billion presale FDV is relatively high. Retail investors participating in the secondary market need to fully assess the project's narrative potential and the competitive landscape within the track.

In the long term, holding ARC with an annual inflation of 2% to 3% requires the network to generate sufficient real transaction fees to offset the pressure of issuance in order to achieve value growth. In contrast, CRCL relies on USDC reserve interest and payment network income, having a relatively clear cash flow support. The two face different risk-return structures.

In the short term, market sentiment often has its own logic. The narrative explosion period around the mainnet launch may bring short-term opportunities, during which Circle's 25% ARC will also appreciate, benefiting CRCL shareholders as well.

On the regulatory front, the implementation of the GENIUS Act has solidified Circle's moat, while the new draft of the CLARITY Act has been made public and is currently advancing in Congress, promising clearer regulatory certainty for the digital asset ecosystem, which is a significant positive for Circle.

Overall, Arc is one of Circle's important strategic initiatives. The white paper states, "A global economic operating system cannot be coordinated by a single entity; it will use participants of Arc to transform into participants that maintain Arc." Whether this vision can ultimately be realized still depends on whether the mainnet can attract a sufficiently large scale of real institutional transactions and economic activities.

Until all data is truly realized, all narratives remain just narratives.