Circle launches its self-developed Arc mainnet; CEO Jeremy Allaire discusses the AI-driven new machine economy with a16z crypto, analyzing the stablecoin USDC moat, the cross-chain protocol CCTP, and future transformations in credit models.
Written by: a16z crypto
Compiled by: Luffy, Foresight News
Circle's original goal was to bring the dollar onto the internet, so that the dollar could circulate anywhere. After more than a decade of deep work in this field, the company's co-founder and CEO Jeremy Allaire began to think: what will happen to the world when the users of the internet increasingly become AI?
He sat down with Chris Dixon and Robert Hackett to discuss the underlying logic of this new machine economy, and how credit, commerce, and global financial infrastructure will be affected. The following is the conversation:
Why build your own new chain, Arc?
Robert Hackett: Our guest today is Circle co-founder and CEO Jeremy Allaire. Circle has just launched the mainnet of its self-developed blockchain Arc; also with us is a16z crypto founding partner Chris Dixon.
Jeremy, I've known you since my days as a reporter at Fortune. I've watched Circle go through multiple transformations: from the bitcoin consumer business, to the Venmo-like payments product Circle Pay, to the trading business, to acquiring an exchange. Ultimately, you built USDC, which today has top-tier global influence among stablecoins. And now you've launched Arc, a new public chain.
First I'd like to ask: why does the world need another blockchain? What is existing infrastructure missing, and what can the birth of a new chain achieve that was previously impossible? Along the way, which experiences led you to decide to build your own blockchain?
Jeremy Allaire: This goes back to the very beginning of Circle. From late 2012 to 2013, what drew me into this field was the idea of programmable money—the network itself becoming a computer that can run applications.
Our idea was to build an internet dollar protocol, essentially "HTTP for money." To achieve that, you need a computer network, and on top of it build higher-level protocols that scale and are easy to use.
Our philosophy gradually took shape: we must ensure that the digital dollar we issue, and the accompanying protocols, can run anywhere. We want USDC to be like Spotify or Netflix—users can use it directly as soon as they get a device. As long as there is a blockchain network, the digital dollar can run properly and be easily integrated. After that we built an interoperability layer to connect the various networks and enable secure asset flows.
When stablecoins first emerged, people found that they solved the pain point of money transfers, and non-speculative real-world demand began to grow.
Then regulators began to scrutinize this sector. If global financial institutions are to connect to blockchains, the blockchain itself must meet a series of standards.
We began talking with a large number of institutions focused on stablecoins and their applications, and found that there was no blockchain purpose-built for this coming mainstream era.
So we decided to build a completely new operating system and network—Arc. This infrastructure can meet high standards, allowing central banks around the world to recognize that this network can carry real money and investment contracts.
We want to build a network jointly owned by a broad set of stakeholders, where network users are also owners. And in the process we clearly realized that the network's primary users, software deployers, and operators are likely to be AI in the future.
So we began studying the various related issues, and we are still exploring them today. The core direction of our product design is the transition to the agent economy—that is the background of the project.
Arc: A compliant financial underlying network for global multi-party participation
Robert Hackett: Chris, you've seen countless financing pitches for new blockchain projects. What makes you believe there is still room in the market for a new public chain?
Chris Dixon: When we invest, what we value most is the team Jeremy has built.
I also agree with his vision. I've mentioned in many articles and talks that this is a new kind of computer—a global financial computer—with enormous platform potential that can spawn entirely new applications.
I also think Jeremy has a deep understanding of regulation and the international landscape. Money has extremely strong network effects, USDC itself is hugely influential, and the dollar is widely recognized globally. Arc has the opportunity to become the underlying network for global money.
Jeremy, I'd like to hear you talk about the international layout. Given the complex environment of governments and regulators in various countries, how do you think about this?
Jeremy Allaire: What's special about Arc is that to operate network infrastructure and, in the future, participate in staking validation nodes, operators must meet stringent operational, information security, and compliance standards.
Infrastructure operators comply with these standards and sign service-level agreements, which is what enables the network to achieve deterministic settlement finality in a very short time. For real money transactions, this is crucial.
On the other hand, we envision an internet-native economic operating system capable of carrying the full range of economic activity. Its functions go far beyond payments—all kinds of financial contracts, economic contracts, and governance decisions can run on it.
To achieve internet-level scale, the network must have diverse geoeconomic and geopolitical distribution. The operation and governance of the infrastructure must remain credibly neutral to all stakeholders—this is one of our commitments.
Leading institutions in global capital markets, asset management, and payments, as well as major banks covering markets in Europe, the US, Asia, and elsewhere, have already participated. This is only the beginning; we hope to bring in more diverse infrastructure participants.
We look forward to a future where major geoeconomic blocs around the world can operate this infrastructure, hold substantial economic stakes in the network, and leading local enterprises use this infrastructure. This is crucial—without a diverse ecosystem, it is very difficult to achieve internet-level adoption. Tools such as blockchain and distributed governance can precisely support this goal, and this is also our core driving force. Of course, everything is still at an early stage.
Moat: stablecoin liquidity, CCTP cross-chain infrastructure
Robert Hackett: Jeremy, how do you view your own moat and competitive barriers?
Jeremy Allaire: First is the stablecoin network, including USDC, the euro stablecoin, and other digital assets we issue. We also have a tokenized bitcoin product, as well as leading tokenized Treasury and money market products. USDC is undoubtedly the core of the entire system.
The more applications that connect to the network, the stronger its utility. Developers will then naturally choose this network because the ecosystem is rich enough, forming a powerful utility flywheel.
Our quarterly stablecoin minting and redemption volume reaches $150 billion, and we are connected to major banking systems around the world. Ample on-chain primary and secondary market liquidity brings extremely strong competitiveness. Deep underlying liquidity on platforms such as Binance, Coinbase, and Hyperliquid improves capital efficiency, and other products that require efficient capital also benefit as a result.
This is the utility network effect and the liquidity network effect. In addition, there is the infrastructure moat—we have built compliant infrastructure in many places around the world, and this is a high-barrier undertaking.
There is also interoperability infrastructure. Circle's Cross-Chain Transfer Protocol (CCTP) is currently the most widely used cross-chain protocol across all blockchains and all asset classes. The reason it is so widely adopted is precisely that USDC is the digital currency with the largest cross-network transfer volume.
A major highlight of Arc is that any asset issued on Arc—whether tokenized equity, stablecoins, or tokenized credit products—can plug into CCTP's transfer capabilities.
Simply put, we have built a highway for value transfer. In the past, only one vehicle—USDC—could run on this road. Now, all asset issuers can use this high-speed network and share interoperability and liquidity.
The stablecoin market is winner-takes-most, but not a winner-takes-all structure. As the market grows from hundreds of billions to trillions of dollars, there will be multiple networks.
Back to Arc itself, I think the industry is entering a new stage. In my view, blockchain is essentially an economic operating system that attracts developers and assets.
This track still has vast room, and currently no single player has firmly captured developers' minds. Compared with traditional internet platforms, the number of active developers across all public chains is very small, and the industry is still at a very early stage. So my judgment is that no one has an absolute moat.In addition, the core participants in the future ecosystem will be AI developing software. There may be humans behind the AI, and there may also be scenarios where AI develops software autonomously; AI will act as an intermediary to complete various types of economic work.
AI + Blockchain Will Give Rise to Entirely New Credit and Economic Models
Chris Dixon: I believe that in the next 10 to 20 years, the digital economy landscape will be restructured, and the rise of high-performance blockchains (such as Arc) happens to coincide with this time window. I am used to understanding the industry through the framework of "skeuomorphic applications" and "native applications." In the early days of a new technology, everyone simply moves existing scenarios onto the platform, such as trading and human payments.
But after a few more years, the most exciting moment will arrive: developers will begin to truly unleash their imaginations and create entirely new things.
Jeremy Allaire: I completely agree. We want to provide developers and entrepreneurs with soil for free innovation.
Credit is one example. A completely new blockchain operating system, a fully reserved digital dollar foundation, and AI—the combination of these three can create entirely new credit instruments, and both the suppliers and demanders of funds can be people or machines. This type of credit market will be more like an advertising bidding platform rather than the traditional model of packaging bonds for sale.
Market structure, unit economics, distribution models, and coverage will all change completely. Tokenized real-world assets (RWA) have already allowed more people to participate in equity investment and given assets more ways to be used, and we have already seen early signs.
Robert Hackett: Jeremy, what is the strangest project you have seen developers build on Arc so far?
Jeremy Allaire: A few days ago I just saw a project called Fly Brain. I do not know the background of the development team. The project compiles all the neural information of a fruit fly brain and the real computational rules of a fruit fly brain into 16MB of bytecode and runs it on Arc.
The developers used AI to build the interaction layer, and these "fruit fly brain" agents evolve autonomously and interact with each other in the network. I have not yet studied its token incentive mechanism and am not sure what the design purpose is.
My first reaction at the time was, what exactly is this for? I also asked on X. The project comes with a large amount of explanation, claiming that the project is expected to help achieve scientific research breakthroughs; of course, it may also just be a gimmick. But the project itself represents a trend: when AI is combined with this kind of computer network and economic mechanism, people will begin to try all kinds of wildly imaginative innovations.
Robert Hackett: The fruit fly brain network on Arc gives "agent swarms" a whole new meaning.
Jeremy Allaire: There is another project about to launch on Arc that specifically handles arbitration mechanisms for AI work.
This mechanism can extend from AI jurors and AI arbitrators all the way to human arbitrators, with a supporting staking security model. The original design intent is to address scenarios where AI hires AI and humans hire AI to complete tasks. Once disputes arise, an arbitration mechanism is needed, along with supporting rules for fund escrow and payment release.
Chris Dixon: In a sense, blockchain can hedge against the centralization trend of AI.
Machines Become the Main Participants of the Internet
Robert Hackett: Chris, you wrote Read Write Own a few years ago, when AI was still in its infancy. What changes have occurred in your thinking now?
Chris Dixon: In fact, the book discusses AI extensively and treats it as one of the core directions. My core view is: although AI is powerful, it naturally has a centralizing tendency—large companies with abundant capital and resources will form a huge advantage. Blockchain can check and balance this trend to some extent.
Open source is very critical. It is the most inclusive trend in the history of technology, and Linux is the best example. Blockchain is similar to open source. It is a type of open service that provides developers with a fair underlying environment and has characteristics such as low fees and global accessibility.
Robert Hackett: Please describe the picture five years from now. Under the integration of these new technologies, what changes will occur in the global financial system?
Jeremy Allaire: Frankly speaking, at this stage no one can give a definite answer. The speed of technological iteration has reached the peak of human history.
But I believe that in the next few years, a large amount of mental work, creative work, and various economic transactions and value exchanges will be dominated by AI agents. This is the machine economy, and this infrastructure will support its implementation. By then, the scale of economic output will far exceed that of today, and the number of products and services available globally will increase by several orders of magnitude. This is the world I envision five years from now.
Chris Dixon: As Jeremy said, many future scenarios are difficult to imagine, but the direction of the trend is clear. The vast majority of participants on the internet will likely be machines. When these machines carry out activities, they naturally need economic capabilities. This is what I call the network of the machine age.