Arc Network: Where Finance Becomes Software

For decades, the global financial system has operated on fragmented infrastructure. Payments, lending, foreign exchange, and settlement systems exist in isolation, each with its own rules, intermediaries, and delays. Even today, a single financial transaction involving multiple steps can take hours or days to fully settle.

This fragmentation is not a technological limitation anymore. It is an architectural one.

Arc Network emerges at this exact inflection point, proposing a bold idea: what if the global economy had a shared operating system, just like computing does?

From Fragmented Finance to a Unified Economic Layer

To understand Arc’s vision, it helps to look at how other industries evolved. Before operating systems like iOS and Android, software development was fragmented across devices. Before cloud platforms, companies had to build their own infrastructure from scratch.

The same pattern is now playing out in finance.

Despite the rise of fintech, the underlying systems remain disconnected. Developers who want to build financial products still need to integrate multiple services, manage settlement delays, and navigate inconsistent infrastructure. This creates friction that slows innovation.

Blockchain technology began solving this by making money programmable. For the first time, assets, transactions, and logic could exist within the same environment. Stablecoins pushed this further by bringing real economic value onchain, enabling trillions of dollars in settlement activity annually .

Arc builds on these breakthroughs, aiming to provide the missing piece: a unified platform where all economic activity can operate seamlessly.

What Arc Is Really Building?

Arc is not positioning itself as just another Layer-1 blockchain. It is designed as a full-stack economic platform, often described as the “Economic OS” of the internet.

At its core, Arc provides a shared infrastructure where multiple financial functions coexist natively, including:

Payments and settlements
Lending and borrowing
Trading and asset issuance
Cross-border financial operations

Instead of stitching together multiple systems, developers can build directly on a single, composable environment.

What makes Arc particularly interesting is its focus on stable coin native design. This enables:

Predictable transaction fees
Faster and deterministic settlement
Better alignment with real-world financial use cases

This is not just theoretical. Since launching its testnet in October 2025, Arc has already processed over 244.1 million transactions as of May 2026 . That level of activity signals early traction and validates demand for this kind of infrastructure.

ARC’s Five Structural Functions

These five functions are interconnected. Network activity feeds all five, and each strengthens the conditions for more activity.

Function	What it coordinates	Why it matters
Economic alignment	Token holders signal confidence when they stake ARC and earn staking rewards from fees and inflation	Participants have economic alignment with the network’s success, scaled by their level of activity
Platform utility	Reduced fees and preferential access across the full platform stack (network, services, kits, and applications)	ARC’s value scales with a participant’s depth of engagement across the Economic OS
Fee capture and distribution	Fees convert to ARC at the protocol level, split between validator and staker compensation and permanent burn	Network usage directly drives ARC demand and supply reduction, regardless of the payment asset
Governance	Token holders vote on economic parameters; validators enforce decisions	Participants shape the rules of the system they depend on through transparent, stake-weighted processes
Expanding utility surface	Examples of potential future designs include multichain coordination, multi-asset gas, specialized transaction lanes, etc.	ARC’s relevance grows with the platform; each new capability widens the surface ARC coordinates

$ARC Token and Network Economics

At the center of the Arc ecosystem is the $ARC token, designed to coordinate activity across the network while aligning participants with its long-term growth.

Arc is transitioning toward a Proof-of-Stake model, where validators are responsible for maintaining uptime, processing transactions, and ensuring reliable block production. Token holders can participate by staking ARC, contributing to network security while earning rewards tied to overall activity.

The token’s economic design focuses on simplicity and sustainability.

Initial supply: 10 billion $ARC tokens
Primary allocation: Majority directed toward ecosystem growth, including developers, users, and network participants
Supporting allocations: Core development and long-term reserves for stability

In the early stages, the network introduces a modest inflation rate of around 2-3% annually, designed to bootstrap participation and validator security. This rate is expected to decrease over time as the network matures and generates organic economic activity .

A key differentiator in Arc’s design is its fee mechanism. While fees are priced with stablecoin predictability, they are converted into ARC at the protocol level. Once converted:

A portion is distributed to validators and stakers as rewards
A portion is permanently burned, reducing circulating supply

A System Designed for Real Economic Activity

What sets Arc apart is its focus on practical usability rather than isolated blockchain functionality.

The network is designed to support everything from simple payments to complex financial workflows within a single environment. A transaction that involves payment, lending, and currency conversion does not need to be split across multiple systems. It can happen natively on Arc.

This opens the door for entirely new types of applications. Developers can build platforms where financial logic behaves like software, executing automatically and interacting with other systems seamlessly.

At the same time, Arc is designed with institutional adoption in mind. Key features include:

Configurable privacy for compliance and enterprise use
Predictable fees through stablecoin - denominated pricing
A structured validator framework for reliability and accountability

This balance between openness and structure makes Arc suitable for both developers and large-scale financial participants.

Governance That Evolves With the Network

Arc’s governance model is designed to evolve over time rather than being fully decentralized from day one.

In the early stages, Circle plays a key role in:

Protocol development
Network operations
Security and compliance decisions

As the ecosystem grows, governance gradually shifts toward token holders and validators. Participants gain influence over key economic parameters such as fees, inflation, and network policies.

This phased approach ensures operational efficiency in the early stages while moving toward a system governed by its participants over time.

Why $ARC Matters Now?

The timing of Arc’s emergence is not accidental. Several key shifts have aligned to make an Economic OS possible:

Blockchain infrastructure enabling programmable finance
Stablecoins bringing real-world value on-chain
Regulatory clarity improving institutional confidence

Arc sits at the intersection of these trends.

It is not attempting to replace existing financial systems overnight. Instead, it provides a shared infrastructure layer that can gradually unify them, reducing friction and enabling new forms of economic coordination.

Final Thoughts

With its mainnet expected in Summer 2026, Arc is entering a critical phase. The transition from testnet activity to real-world adoption will determine how effectively it can deliver on its vision.

If successful, Arc could redefine how financial systems are built and operated. It could enable a world where:

Economic activity is as seamless as software
Developers build financial applications without infrastructure barriers
Global markets operate on unified, programmable rails

The concept of an Economic Operating System may seem ambitious, but history suggests that once shared infrastructure emerges, it reshapes everything built on top of it.

Arc is making a strong case that finance is next, and Encapsulate, as a validator, is committed to securing and strengthening the foundations that make this transition possible.