Title: [Asset Technical Assessment] USDC on Arc
Author: Aave Labs
Date: 2026-09-15
Summary
Technical assessment of USDC on Arc, following the Technical Asset Listing Framework.
Overall result: 
MEDIUM
USDC is Arc’s native gas currency, with a standard ERC20 surface, a live Chainlink USDC/USD price feed, and a canonical FiatToken V2.2 codebase that the reviewer confirms was audited with no significant findings. The principal considerations are Circle’s privileged controls without an onchain delay, including an account freeze that prevents a frozen address from transacting, and the distinct gas currency implementation, deployed as NativeFiatToken V2.2. All privileged roles are held by Circle, but there is no concentration risk since each role sits on its own distinct address (see Section 3).
Technical conclusion
From a technical standpoint, USDC is eligible for listing on Arc.
Asset under review
| Field |
Value |
| Asset |
USD Coin (USDC) |
| Target chain |
Arc mainnet (chain ID 5042) |
| Token contract |
0x3600000000000000000000000000000000000000 |
| Native to target chain? |
Yes, Arc’s native gas currency |
| Aave Asset Classification (AAcA) |
Stablecoin backed by fiat, with a US dollar peg |
USDC is Circle’s US dollar stablecoin and Arc’s native gas currency. It operates in a dual mode on Arc: as the native gas currency and through an ERC20 interface that represents each account’s native balance, both described further throughout this assessment. Circle issues and destroys supply through its minter system and its bridge.
0. Pre-screening
USDC is an active genesis deployment at Arc’s fixed gas currency address, implemented as a ZeppelinOS transparent proxy. Its implementation and proxy administrator have not changed since genesis; it is classified as a stablecoin backed by fiat and is not in a non-approved or sanctioned category. The reviewer confirms that Circle’s canonical FiatToken V2.2 codebase, from which the Arc implementation (NativeFiatToken V2.2) derives, was audited with no significant findings.
Rating: MEDIUM → the active deployment uses a distinct gas currency implementation.
1. ERC20 Compliance
USDC has a standard ERC20 surface with six decimals: transfer() and transferFrom() return a boolean, with no fee on transfer, rebasing, ERC777 or ERC1363 hooks, or flash mint. Its accounting is native to the protocol, with balances tracked at 18 decimals and truncated to comply with the six-decimal ERC20 interface. Its balance is a view over native account balance, and contracts can hold and transfer it subject only to the issuer’s account freeze capability, assessed in Section 3. Mixing the ERC20 interface and native transfers within the same integration is a source of behavioral risk, since both resolve to the same underlying execution-layer balance (see Section 5).
Rating: 
GOOD
2. Oracle
A live Chainlink USDC/USD feed on Arc provides a price with eight decimals, a 24 hour heartbeat, and a 0.5% deviation threshold. Ethereum mainnet’s USDC/USD feed uses a 23 hour heartbeat and a 0.25% deviation threshold.
Rating: GOOD
3. Access Control
Circle’s proxy administrator, token owner, pauser, freeze authority, and the owner of the MasterMinter contract are Cold Storage EOAs, meaning single-key addresses held in offline storage by Circle’s team, under the recorded reviewer determination. Each role sits on its own distinct address, so no single key holds more than one privileged role. No onchain timelock protects these roles: the MasterMinter owner can change minter allowances, while the pauser can halt token activity and the freeze authority has frozen 419 addresses; frozen balances cannot be seized or destroyed. Since USDC is Arc’s native gas currency, a freeze also prevents the address from transacting; live minter allowances total 53,195.851980 USDC, approximately 1.22% of supply, but the authority that sets them can increase them without delay. All of these roles are held by Circle, concentrating every privileged control over USDC in a single entity, though not in a single address.
Rating: MEDIUM → privileged controls are accepted as Cold Storage EOAs, but operate without an onchain delay, and the freeze authority also halts an address’s use of USDC as gas.
4. Exchange Rate and Yield
Not applicable. USDC is a stablecoin backed by fiat with no exchange rate function, rebase, or yield accrual.
Rating: 
N/A
5. Token Architecture
USDC has one canonical token contract on Arc, but with dual entry point: native, protocol-level transfers and the ERC20 interface, both of which resolve to the same execution-layer accounting rather than token storage. USDC implements EIP-7708, so native balance movements emit an ERC20-style Transfer event for compatibility with existing indexing and tooling. Blacklisting and freeze operations are enforced at the execution layer rather than in contract-level storage; because USDC is Arc’s native gas currency, an account with no balance cannot transact, and an address on the freeze authority’s blacklist (see Section 3) cannot transact either, regardless of balance. Aave’s own integration with USDC uses only the ERC20 entry point, so this dual entry point does not affect Aave’s exposure directly. Mint and burn events provide supply observability, while the implementation has no tx.origin authorization or delegatecall outside the proxy pattern.
Rating: MEDIUM → the main concern is USDC’s dual entry point, native transfers and the ERC20 interface both resolving to the same execution-layer balance; Aave’s integration uses only the ERC20 interface and is not exposed to this concern.
6. Bridge and Cross Chain Risk
USDC has one external mint route, Circle’s Cross Chain Transfer Protocol (CCTP), which burns supply on the source chain and mints it on Arc. Two Circle attesters are both required to authorize CCTP messages, and the bridge has 28 remote domains and a 100,000 USDC limit per message, without an aggregate throughput limit. Bridge administration, including the authority that can change the attester set and threshold, is held by Circle addresses without an onchain delay.
Rating: MEDIUM → both attesters must authorize the burn and mint route, which has a limit per message, but it relies on one issuer trust domain with no onchain delay across its administration.
7. Audit and Security History
The reviewer confirms that Circle’s canonical FiatToken V2.2 implementation was audited with no significant findings, and the CCTP audit report identified no relevant findings for the bridge’s message verification. The deployed gas currency implementation, NativeFiatToken V2.2, differs substantially from the canonical codebase, and neither audit report covers it directly. Its implementation has not changed since genesis, and its observed ERC20 behavior is standard. Circle has confirmed that the relevant audit report will be made public shortly after launch.
Rating: MEDIUM → the canonical codebase and CCTP are both covered by reviewed audits, but the distinct NativeFiatToken V2.2 gas currency implementation is not; Circle has confirmed a public report will follow shortly after launch.
8. Dependencies
USDC depends on Circle’s offchain US dollar reserves, the MasterMinter control path (see Section 3), the CCTP bridge (see Section 6), and the Arc system components that support its gas currency design (see Section 5). Arc has no onchain proof of reserve feed, decentralised exchange, or permissionless onchain redemption path; redemption is an offchain Circle Mint process for permitted participants.
Rating: MEDIUM → value, issuance, and redemption depend on Circle’s offchain reserves and operational systems, alongside privileged onchain control paths.
9. Summary
Findings table
Ratings in this table are plain text (Good / Medium / Critical / N/A), no icons.
| Area |
Key finding |
Rating |
| 0. Pre-screening |
Active genesis deployment at Arc’s gas currency address, structured as a transparent proxy with no implementation rotation; the reviewer confirms Circle’s canonical FiatToken V2.2 codebase was audited with no significant findings. |
Medium |
| 1. ERC20 |
Standard ERC20 surface with six decimals, no fee on transfer, rebase, hooks, or flash mint. |
Good |
| 2. Oracle |
Live Chainlink USDC/USD feed with eight decimals, within its 24 hour heartbeat. |
Good |
| 3. Access control |
Cold Storage EOAs control upgrades, roles, pause, freezes, and discretionary mint allowances without an onchain delay; a USDC freeze also prevents the address from transacting. |
Medium |
| 4. Exchange rate / yield |
Stablecoin backed by fiat with no yield or exchange rate mechanism. |
N/A |
| 5. Token architecture |
Dual entry points, native transfers and the ERC20 interface, both resolve to the same execution-layer balance; the implementation (NativeFiatToken V2.2) remains distinct from standard FiatToken V2.2 code. |
Medium |
| 6. Bridge and cross chain |
CCTP burn and mint route with two required Circle attesters, 28 remote domains, and a 100,000 USDC limit per message. |
Medium |
| 7. Audit and security |
FiatToken V2.2 and CCTP are covered by reviewed audits; the distinct NativeFiatToken V2.2 gas currency implementation is not, though Circle confirmed one will be made public shortly after launch. |
Medium |
| 8. Dependencies |
Relies on Circle’s offchain reserves and redemption, MasterMinter and CCTP control paths, and Arc system components. |
Medium |
Disclaimer
Aave Labs has no formal or informal affiliation with Circle or the USDC issuer beyond this technical assessment. Aave Labs has not been compensated by Circle or any related party in connection with this work.
Copyright
Copyright and related rights waived via CC0.
