For developers building on Circle products, post Q&A, best practices & SDK/API insights. Use Tags

Circle Products & Developer Toolings

Every blockchain ever built has the same design flaw. Before you can do anything send a stablecoin, interact with a smart contract, claim an airdrop you need to own the chain's native token. Ethereum requires ETH. Solana requires SOL. Arbitrum requires ETH on Arbitrum. Base requires ETH on Base. Polygon requires POL.

It doesn't matter if you only want to use USDC. You can't touch your own stablecoins without first buying a volatile cryptocurrency to pay for gas. This has been true since Ethereum launched in 2015. It's been true on every L1 and L2 that followed. And it's been silently killing mainstream adoption the entire time.

This post is about why that matters more than most people think, what the industry has tried to do about it, and how Arc actually fixed it.

If you've been in crypto for a while, the gas token requirement feels normal. You buy ETH, you keep some in your wallet for gas, you manage your balances across chains. It's just how things work.

But step outside the crypto bubble and look at this from the perspective of someone trying to use stablecoins for the first time a freelancer in the Philippines receiving USDC payment, a small business in Nigeria accepting stablecoin invoices, a fintech app trying to onboard its first thousand users onto on-chain payments.

 Someone sends them USDC. They now have USDC in their wallet.

They try to send that USDC somewhere to another wallet, to a merchant, to an exchange.

The transaction fails. "Insufficient funds for gas." They have $500 in USDC but they can't move it because they have zero ETH.

 They need to figure out how to acquire ETH. This means either buying ETH on an exchange (which requires KYC, bank linking, and understanding what ETH even is) or asking someone to send them ETH (which requires knowing someone who has it).

 If they're on the wrong chain, they might buy ETH on Ethereum mainnet but need it on Arbitrum or Base. Now they need to bridge. Which costs gas. Which they don't have on the right chain.

This is the actual experience for billions of potential stablecoin users. Not a theoretical problem. A real one.

Research from Coinbase's own activation funnel analysis shows that up to 90% of new crypto users abandon before completing their first transaction. Token mismatches, underfunded gas fees, and misconfigured chains are among the most common failure points. Every additional friction point in onboarding increases drop-off rates significantly.

The gas token requirement isn't a minor inconvenience. It's a structural barrier that filters out everyone except people who are already comfortable with cryptocurrency. And that's exactly the wrong filter if the goal is mainstream stablecoin adoption.

The gas token problem isn't an accident. It's a direct consequence of how blockchains were designed.

When Ethereum launched, the vision was a general-purpose smart contract platform. ETH was designed as both the incentive token for validators and the unit of account for computation. Every operation costs gas, gas is priced in ETH, and validators earn ETH for processing blocks. The economics are internally consistent: ETH secures the network, ETH pays for usage, ETH rewards the operators.

This made sense in 2015 when the primary users were developers and early adopters who understood the technical model. Stablecoins didn't exist yet. The idea that ordinary people would use blockchains to send dollars was years away.

But then USDC launched in 2018. Stablecoins grew from nothing to over $200 billion in circulation. On-chain stablecoin transfers settled $33 trillion in 2025 alone more than Visa's $15.7 trillion in 2024. The use case shifted fundamentally. The dominant activity on blockchains is no longer speculative trading or NFT minting. It's moving dollars.

And yet every chain still forces dollar users to hold a non-dollar token to move those dollars. The infrastructure didn't adapt to the use case that won.

Every L1 and L2 that launched after Ethereum inherited this design. Solana has SOL. Avalanche has AVAX. Polygon has POL. Arbitrum, Base, and Optimism all use ETH. Even chains that market themselves as "stablecoin-friendly" still require a volatile token for gas. They bolted stablecoin support onto an architecture that was never designed for it.

The crypto industry hasn't been blind to this problem. Several approaches have emerged to reduce gas token friction. But every one of them is a workaround, not a solution.

 This is the most sophisticated attempt. ERC-4337 introduces "smart accounts" that can delegate gas payment to third-party "paymasters." A paymaster can accept USDC from the user and pay the ETH gas fee on their behalf. From the user's perspective, they're paying in USDC. From the chain's perspective, ETH is still being spent.

 ERC-4337 adds significant architectural complexity. It requires bundlers (centralized services that package user operations), paymasters (services that front gas costs and need to be funded), and a separate mempool for user operations. Developers need to integrate with this entire infrastructure. The user experience is better, but the underlying dependency on ETH hasn't changed it's been moved from the user to the paymaster operator. If the paymaster goes down or runs out of ETH, the abstraction breaks.

Introduced in Ethereum's Pectra upgrade, EIP-7702 allows externally owned accounts (regular wallets) to temporarily delegate to smart contract logic. This enables some account abstraction features without requiring users to migrate to smart contract wallets. But it still doesn't include native gas sponsorship that remains an ERC-4337 feature. And it still requires ETH for gas at the protocol level.

Some protocols and wallets offer to pay gas on behalf of users as a growth strategy. Trust Wallet, for example, launched gas sponsorship to eliminate the "you have the tokens but not the gas" problem. But these are subsidies, not solutions. They depend on a company choosing to absorb costs. They can be discontinued at any time. And they don't change the fundamental architecture.

Some ERC-20 tokens support gasless approvals through signed messages. But the actual transfer still requires gas in the native token. This solves one step of the process, not the whole flow.

 Services that accept signed transactions from users and submit them on-chain, paying gas on the user's behalf. Again, the gas cost is moved, not eliminated. Someone is still paying ETH.

Every single one of these approaches shares the same fundamental limitation: the blockchain still requires a volatile token at the protocol level. The workarounds just determine who pays it and how it's hidden from the user. The abstraction leaks the moment anything goes wrong the paymaster is unfunded, the relayer is down, the sponsor discontinues the program, or the user ends up on a chain where no one is offering to cover their gas.

Arc didn't build another workaround. It removed the problem at the protocol level.

Arc is a Layer-1 blockchain, built by Circle, where USDC is the native gas token. Not through a paymaster. Not through account abstraction. Not through a sponsorship program. USDC is what the chain itself uses for gas computation, the same way Ethereum uses ETH.

When you send a transaction on Arc, you pay the fee in USDC. The validators are compensated in USDC. The fee market operates in USDC. There is no volatile token anywhere in the transaction flow.

This is a fundamentally different design decision. Every other chain said "we'll add stablecoin support to our existing architecture." Arc said "we'll build the architecture around the stablecoin."

 A user receives USDC on Arc and can immediately send it, swap it, or interact with any smart contract. There's no "Step 0" of buying a separate token.

Gas costs on Arc are priced in dollars, not in a volatile asset. A transaction that costs $0.50 today will cost roughly $0.50 tomorrow. On Ethereum, a transaction that costs $0.20 at 0.26 gwei could cost $50 during a congestion spike not because the computation changed, but because ETH demand spiked. Arc eliminates this entire category of unpredictability.

Arc implements an exponentially weighted moving average of block utilization with tight bounds on gas price changes. This smooths out fee fluctuations and prevents the kind of spikes that make Ethereum unusable during high-demand periods. The gas market on Arc is designed to be boring and predictable which is exactly what a financial settlement layer should be.

 Arc uses Malachite, a high-performance BFT consensus engine, to achieve deterministic sub-second settlement finality. Not probabilistic. Not "usually fast." Every transaction is final in under one second, every time. Combined with USDC gas, this means a payment on Arc settles faster and more predictably than a credit card transaction.

Arc is fully EVM-compatible. Developers use the same tooling, the same languages (Solidity, Vyper), the same frameworks (Hardhat, Foundry) they already know. The difference is that their users never need to acquire a separate gas token. Same development experience, fundamentally better user experience.

The gas token problem isn't just a UX inconvenience. It's the reason stablecoins haven't replaced traditional payment rails yet, even though the technology is ready.

 USDC currently has over $75 billion in circulation, growing 78% year-over-year. Stablecoin transfers settled $33 trillion in 2025. Circle's CCTP processed over $41 billion in a single quarter with 740% year-over-year growth. The infrastructure for moving dollars on-chain is already at scale.

almost all of that volume is crypto-native users and institutions who already understand gas tokens. The next billion stablecoin users the freelancers, the small businesses, the remittance senders, the people in countries with unstable local currencies who just need a reliable dollar can't get past the gas token barrier.

The World Bank reports that the global average cost of sending remittances is 6.36% of the transaction amount. Stablecoins could reduce this to near-zero. But if receiving a stablecoin remittance requires the recipient to first understand what ETH is, create an exchange account, pass KYC, buy ETH, bridge it to the right chain, and then finally move their USDC the on-ramp is worse than Western Union.

Arc eliminates this entire friction chain. USDC arrives. USDC moves. USDC pays the fee. That's it.

This is what Circle means when they describe Arc as the "Economic OS for the internet." Not just another blockchain that supports stablecoins. A blockchain that IS stablecoins.

ARC SOLVED THE ONE PROBLEM THAT'S BEEN KILLING CRYPTO ADOPTION FOR 10 YEARS

Home

Forum

Events

Content

Courses

People

Contributors

Albums

Groups

Chat

Channels

Not being used

Help

Join the global network of builders developing the Economic OS for the internet. We’re reimagining how value moves, creating the tools that make the economy work for everyone.

Arc House

Profession

Join a global network of builders developing the Economic OS for the internet. We’re reimagining how value moves, creating the tools that make that economy work for everyone. 

Arc House | Build the economic OS for the internet with us

Copyright

Terms of Service

Privacy

Code of Conduct

Your Privacy Choices

It looks like there is no account associated with the email you provided. The event is for members only. Please complete the application to join our community first.

Thank you for your interest in joining us

Thanks for your interest in joining the event. However, your account is still pending. Once it's approved, you'll be able to register for the event. Please contact us via noreply@arc.network if you need support.

Pending Approval

Login to the The Arc Community Hub community to connect with others, attend community events, and more!

Login or Sign Up for even more

To unlock all parts of the community complete your profile using verifiable and real information.

Hey, complete your profile

It looks like there is no account associated with the email you provided. Please complete the application to join our community.

Thank you for your interest in joining Arc House.

Thanks for your interest in joining Arc House. We will review your request shortly and email you once it's approved. Meanwhile, please feel free to contact us via noreply@arc.network for any questions.

Accounts are unapproved when profile information cannot be verified or when activity patterns indicate spam, inorganic participation, or behavior that undermines trust in the program.

To strengthen your profile for future consideration, sign in with a verified LinkedIn account, use real and current profile information, and participate constructively in other community spaces.

Commercial customers should raise concerns through their support channel.

https://www.arc.network/community-guidelines