How does USDC's Arc chain ensure stable Gas fees and enable the vision for global on-chain payments?

Arc Network introduces USDC as the native Gas, providing stable dollar-denominated fees to address the fluctuation of blockchain transaction costs. This article is sourced from Circle's writings, organized, compiled, and authored by Sleepy.txt and BlockBeats. (Background: The new battleground for stablecoins: The Layer 1 route dispute between Stripe and Circle) (Additional context: Circle releases Q2 financial report: USDC market capitalization rises 90% year-on-year, L1 blockchain Arc to be launched in Q3, CRCL pre-market rises 10%) Editor's note: In the development history of blockchain, the Gas mechanism has always been one of the most troublesome issues for enterprises and developers when applying it in practice. The unpredictability of costs, closely linked to the price fluctuations of the crypto market, makes blockchain difficult to be regarded as a reliable infrastructure. The emergence of Arc provides a systematic solution to this pain point: it sets USDC as the native Gas, supplemented by a cost-smoothing algorithm and enterprise-grade accounting logic, attempting to convert the usage cost of blockchain into a predictable dollar pricing similar to SaaS. In scenarios such as payment, fund management, and capital markets, this transformation not only means simplification at the operational level but also a restructuring at the level of financial infrastructure. This article will delve into the Gas mechanism design of Arc Network and its potential implications for future applications. The full text is as follows: Every type of transaction, whether it is swiping a credit card, sending a wire transfer, or currency exchange, requires a cost to use the underlying infrastructure. These fees help cover the resources that make payments possible. Blockchain is no exception: every operation on the network requires a small transaction fee to maintain its operation. In an on-chain environment, these fees are referred to as 'Gas'. On many mainstream blockchains, Gas fees are priced in the volatile native assets of the blockchain (such as ETH, SOL, etc.), and the dollar cost of transactions depends on: How much Gas units your transaction consumes: This is the fixed computational workload required for your transaction, based on the specific operations it executes on the blockchain. The base fee per unit set by the protocol: This is the price that the network sets for each unit of Gas, which may fluctuate based on the congestion level of the blockchain at any given time. The market price of the native token: This refers to the dollar value of the blockchain's native Gas token in the public market, which continuously fluctuates and directly affects the actual cost of Gas. Among these factors, the market price of the token is often the most important source of uncertainty. Its value may fluctuate sharply between the planned transaction time and the actual execution time — which at best creates accounting troubles and at worst produces levels of volatility that make blockchain impractical for many businesses. The volatility of Gas fees can significantly complicate accounting processes and business models, making it difficult to set consistent pricing for customers. This is why finance, payment, and enterprise teams often say: 'We need predictable costs that can be planned' and 'Our fund management team cannot hold volatile crypto assets to pay Gas fees.' Arc was specifically built to eliminate this barrier. Design of Arc: USDC as Native Gas One of the most significant and important innovations of Arc is that USDC is the native Gas token of the network. Each transaction fee is paid in USDC, a stablecoin pegged to the dollar, rather than a speculative asset. Since USDC is designed to maintain a stable value, enterprises do not have to worry about their blockchain operating costs rising and falling with the fluctuations of the crypto market. As mentioned earlier, users will experience fluctuations in Gas fees due to changes in network conditions and the market price of Gas tokens. These variables combined can make it nearly impossible to accurately know the dollar cost of a transaction in advance. By eliminating the volatility of token prices from the equation, Arc makes predictable, dollar-denominated costs possible — reducing accounting complexity and operational friction. How Arc Keeps Costs Low and Stable Arc does not just stop at dollar pricing; it also stabilizes the level of fees. The fee market of Arc is inspired by Ethereum's EIP-1559 but adjusted for predictability: Fee smoothing: Arc does not adjust the base fee block by block but uses an exponentially weighted moving average of block utilization to update the base fee, which is restricted within strict boundaries. This suppresses short-term spikes, so fees do not fluctuate dramatically due to brief demand surges. Bounded base fees: Guardrails limit the speed at which fees can move, further stabilizing long-term costs. Throughput and finality: Sub-second determinism finality (supported by the Malachite consensus engine) and high throughput provide ample block space at high speeds, reducing the possibility of congestion — another driver of fees on other networks. Circle Paymaster and Multi-Currency Support Future roadmap projects include enhancements to Circle Paymaster, allowing other regulated stablecoins (such as EURC) to be used as Gas via paymaster routing (i.e., users can pay transaction fees with EURC or other assets that are automatically routed and converted to USDC in the background through the built-in stablecoin forex engine), providing global enterprises with local currency options without disrupting cost predictability. Imagine Arc as an enterprise-grade network where Gas is just another item priced in dollars. You would not accept a payment processor where the fees unexpectedly jumped 20% due to speculative token prices; for many critical use cases, we believe blockchain should not operate like that either. Arc eliminates this variable, allowing you to plan, price, and scale with confidence. Here’s how the low-cost and predictable Gas fees priced in USDC can benefit your business: Predictable unit economics Financial teams need to reserve additional capital to cover such risks: when they replenish their native Gas token holdings, the dollar value of these tokens may have already fluctuated significantly — which means the cost of maintaining the same coverage level could be several times what they expected to spend. Since Arc prices each transaction in USDC and adopts a smooth moving average, the costs approved in your operational meetings should reflect in the expenses on your books, allowing budgeting and forecasting to lock in fixed dollar amounts rather than moving targets. You can model the cost of each transaction just like modeling any other SaaS or payment track entry. Cleaner accounting and compliance The accounting ripple effect can also be significant. Every time a business pays Gas with a volatile asset, it may record a taxable disposition and may need to calculate fair value adjustments. Arc’s USDC fees are designed to be treated like dollar operating expenses, with no forex conversion layer, no capital gains risk. This also aligns with the way financial teams already think about costs (i.e., in dollars), reducing internal friction between product, finance, and fund management. No mandatory exposure to volatile assets Fund management policies can also become simpler. Some corporate treasury departments are prohibited from holding volatile crypto assets, forcing operational teams to go through brokers or exchanges each time they need native Gas tokens. With Arc, the only asset you need to keep on your balance sheet is USDC, which...