Circle Launched Its Own Blockchain. What Happens to Ethereum? | Markets Outlook

Kate Irwin (0:00)

We're excited for this.

Nikhil Chandhok (0:00)

This means that if I'm an institution, if I want to transact privately, whether with another institution, another user, or another smart contract, I don't have to worry about others being able to find out my balances or how I'm transacting. So yeah, it's a pretty big milestone for us.

SPEAKER_3 (0:22)

Crypto markets move fast. You need research that keeps up. That's the stack. Grayscale's blog with sharp analysis from the team that's tracked digital assets since 2013 Head to grayscale.com/thestack.

Introducing RealFi, a smarter stable coin that's backed by real world assets. Join the Testnet now at realfi.co.

Kate Irwin (0:43)

Welcome back to Markets Outlook. My name is Kate Irwin, and today we're here with Nikhil Chandhok, the Chief Technology and Product Officer at Circle. Welcome to Markets Outlook.

Nikhil Chandhok (0:53)

Excited to be here, Kate. Thank you for having me.

Kate Irwin (0:57)

Yeah, thanks for being here. Today, we're thinking about a lot of different things. The ARK mainnet launch is happening, as well as there's some lingering crypto news in the broader industry about the Clarity Act failing to pass the Senate. Are you seeing that as impacting Circle's business at all? How are you seeing that impact in the markets, or are you more looking at the Genius Act as your guiding light at Circle?

Nikhil Chandhok (1:25)

Yeah, thank you for asking that question.

We were hopeful about Clarity passing, and I'll let the policy team at Circle opine more deeply about what happens from here. For us at Circle, to build the products that we're building, Genius, in your words, Genius is our guiding light. Genius was passed last July, and the rule is going to affect in January next year. What that means is that stable coins will become federally supervised and will be treated as real money inside the system, which means institutions and enterprises that have been hesitant to hold stable coins, can now hold stable coins and use them for their daily transactions, much like they use bank money or other kinds of money.

For us, that's a pretty big milestone. It's not far away. That's four months, and we want to make sure we're ready for it. We will be ready for it. We will be the largest distributed stable coin. That is Genius Compliant Day 1 once the rules go live. With that, we also have what we're announcing today, which is our ARK blockchain. And for all of this institutional traffic that are going to use an institutionally sound stable coin, we want to make sure that we have an institutional state blockchain that all that traffic can ride on. And so we're announcing ARK today, so we're very excited about that as well.

Kate Irwin (3:00)

The ARK mainnet is using USDC as its gas token. There's the option for private payments. Can you speak a little bit more to the opt-in privacy element of the blockchain and why you came to that decision?

Nikhil Chandhok (3:14)

So I have studied blockchains. I mean, this is my fifth year at Circle. I was interested in blockchains before I came at Circle. Typically, the way you would do privacy in the past is, amongst other things, is you would use these privacy mixers and they were really problematic.

What Circle did is something very different, which Circle said, all right, first we want to make sure that the experience of privacy is very simple. If you have a wallet and your transactions are public by default on ARK, but let's say you did want to transact privately or wanted to interact with a smart contract privately, you could just toggle the switch on your UI and you can say, this transaction is going to be private. That's all you need to do from a user experience perspective. What it does is it uses something what we call on ARK and ARK privacy sector, which is a specific lane for private traffic.

Nobody else can look at that traffic unless they have the viewing keys, and those viewing keys are typically the two parties that are doing the transaction. We're excited for this. This means that if I'm an institution, if I want to transact privately, whether with another institution, another user or another smart contract, I don't have to worry about others being able to find out my balances or how I'm transacting. It's a pretty big milestone for us.

Kate Irwin (4:35)

In terms of ARK compared to maybe the traditional financial system and rails that currently exist versus maybe other blockchains, what would you say is allowing ARK to really stand out in the current moment?

Nikhil Chandhok (4:48)

There are a few things. One is like gasses in USDC. I know it feels like a trivial thing to some, but we live in a world in which new economic actors are being created by the millions every day, i.e. agents. If you're in a world in which you're running all of this agentic traffic, I think it's much harder to ramp these agents, not just into your core stable coin that you're going to be operating in, but also a gas token. Gas tokens tends to have variable values, so every minute you're not sure how much token you need to hold. That means you're just overspending on token, and it becomes difficult to account because USDC is going to be accounted for as cash once genius is live, but if you have a native token, you're not sure what it is. So if you're really running an enterprise use case or an institutional-grade use case, you need gas to be as simple as just paying in USDC. You're just paying for the transaction, which is what you're used to today in other rails. You don't come up with a different token to pay for a wire or pay for a payments transaction or something like that. So that's one. I'd say the other key things that are important are the speed, like we have sub-second finality.