Circle, the issuer of the USDC stablecoin, announced its new Layer 1 blockchain called Arc. The network will use USDC as its native asset for paying transaction fees, a mechanism designed to provide low and predictable costs for users and developers.

This approach directly addresses the issue of volatile gas fees prevalent on other blockchains, where transaction costs swing with the price of the native token. By using a stablecoin for gas, Arc aims to make transaction costs a stable line item rather than a fluctuating market variable, which is crucial for businesses building on-chain.

According to the announcement, Arc is purpose-built for stablecoin finance. It will feature a built-in FX engine and sub-second settlement times while being fully integrated with Circle's existing product suite and maintaining interoperability with other blockchains.