Circle (CRCL) Acquires Malachite To Fuel Development Of New Arc Blockchain

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Circle, the issuer of the USDC stablecoin, has recently made headlines with its public debut on NASDAQ under the ticker CRCL. This move is part of a broader strategy that includes the development of a public blockchain specifically designed for stablecoin transactions, known as the Arc Blockchain. 

Malachite Integration For Arc Blockchain

The company announced on Monday that it has acquired Malachite, a consensus engine that will reportedly play a crucial role in supporting the launch of Arc1, an open Layer-1 (L1) blockchain network tailored for stablecoin finance, expected to launch later this year.

Malachite has attracted Circle’s attention for its work in consensus and verifiability. It features a Byzantine Fault Tolerant (BFT) consensus engine based on the Tendermint algorithm, designed with a modular approach that prioritizes correctness and efficiency. 

Originally developed to fulfill the real-world demands of decentralized systems, Malachite’s integration with Circle is anticipated to enhance the performance, reliability, and security of stablecoin-based payments. 

As announced, this alignment with Malachite’s mission to deliver trustworthy, low-cost, and borderless financial infrastructure reinforces Circle’s commitment to innovation in the stablecoin space. 

Ethan Buchman, CEO of Informal Systems, which developed Malachite, expressed enthusiasm about the acquisition, calling it a significant validation of both Malachite and their incubation model. 

He emphasized that firm’s adoption of Malachite provides a “financial foundation for future development,” ensuring that their technology contributes to meaningful outcomes aligned with their mission. 

Circle Remains Cautious In Expansion Strategy

This acquisition comes at a time when Circle is experiencing a notable surge in metrics. Jeremy Fox-Geen, Circle’s Chief Financial Officer, reported a significant increase in institutional interest following the company’s IPO and the introduction of the GENIUS Act for a new stablecoin framework.

As of June 30, the circulation of USDC had increased by 90% compared to the previous year, with the stablecoin issuer projecting sustained growth at a compounded annual rate of 40%.

Financially, Circle has reported a robust year-over-year (YoY) revenue increase of 53%, reaching $658 million. This growth has primarily been driven by increased interest income generated from the cash reserves and short-term investments backing its USDC stablecoins. 

However, Circle did report a net loss of $482 million, attributed to non-cash charges related to its IPO. Jeremy Allaire indicated that Circle is taking a cautious approach to acquisitions, stating, “We’re careful and deliberate. I don’t think our strategy here is to go try and do big, complex acquisitions to throw additional business lines.”

As of this writing, Circle’s stock, CRCL, trades at $145, a drop of over 50% from its $299 record reached only three weeks after its initial public offering. 

Featured image from DALL-E, chart from TradingView.com 

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