First, the basics: what is Cycles?

Cycles is building a clearing network for on-chain finance. That sounds complicated, but the idea is simple and actually pretty old: banks and clearinghouses have used it for decades.

If you want to go deeper, we have already published an article that breaks down the concept in more details.

Cycles Pay has already been tested for about a month in a public beta, gathering around 20,000 email sign-ups, 3,500 completed wallet set-ups and roughly 20 businesses actively sending real invoices through it.

On June 17, Cycles officially announced that they are moving both products (Cycles Pay and Cycles Prime) from Neutron, part of the Cosmos family of blockchains, to Arc.

What is Arc?

Arc is a new blockchain built by Circle, the full-stack platform for the internet financial system with compliance-first approach: licenses across 55+ jurisdictions, the first stablecoin issuer to comply with MiCA and a national trust bank charter in the US. Circle is the US company behind USDC. Beyond USDC, it offers EURC (its euro equivalent), liquidity products (Mint, StableFX), an institutional payment network (Circle Payments Network) and now its own blockchain, Arc. 

Circle describes Arc as an “Economic OS”, essentially a base layer purpose-built for moving and managing digital money. Arc has attracted serious attention since it was announced: its public testnet launched with engagement from over 100 institutions, including names like Amazon Web Services, Mastercard, Visa, HSBC, Invesco, Société Générale and State Street. Circle also closed a $222 million token presale led by Andreessen Horowitz, with participation from BlackRock, Apollo, and Intercontinental Exchange, valuing the network at roughly $3 billion FDV. 

Why is Cycles making this move?

A few concrete reasons:

• Speed and finality

On most blockchains, when your transaction is confirmed, there’s still a small chance it could be reversed shortly after (this is called a “reorg”). Arc is designed so a transaction is either not confirmed yet, or it’s 100% final: no in-between, no probabilistic finality creeping toward “safe enough”. 

In hard numbers: sub-second block times, north of 3,000 TPS, with deterministic finality clocking in under 350ms, across a geographically distributed validator set. 

• Predictable fees, paid in USDC

On many blockchains, you have to pay transaction fees in a separate, often volatile cryptocurrency. Arc lets you pay fees directly in USDC, so a business always knows roughly what a transaction will cost, instead of being surprised by fee spikes.

• Deep ties to the USDC ecosystem

USDC is already at the center of Cycles Pay and most on-chain payment apps. Since Arc is built and optimized around USDC, with banking-style compliance tools built in, it gives Cycles infrastructure that businesses are more likely to trust.

• Privacy

Businesses generally can’t operate on a fully public ledger exposing payment amounts, timing and who you’re paying gives competitors information they shouldn’t have. Cycles built its own privacy stack on Neutron using Penumbra’s shielded pool tech (originally CosmWasm-native), and has already routed over $200k of its own invoices through it privately. 

Since Arc is EVM, not CosmWasm, Cycles had to port the shielded pool contracts from CosmWasm to Solidity and swap the underlying cryptography to run natively in the EVM. Long-term, Arc is shipping its own native privacy layer (the “Arc Privacy Sector,” built on trusted execution environments and view-key-based selective disclosure), and once that’s production-ready, Cycles plans to migrate to it and drop the overhead of maintaining their own privacy stack entirely.

Does this mean Cycles is leaving the Cosmos ecosystem entirely?

Not quite. The team has been clear that this move is about Arc’s specific advantages (speed, compliance tooling, the USDC payment ecosystem and the privacy roadmap), not about abandoning Cosmos technology. In fact, Arc itself uses Tendermint-based consensus, the same family of technology that underpins Cosmos. And Hydro (which powers the savings accounts inside Cycles Pay), is moving its core operations to the Cosmos Hub, while still launching a USDC vault on Arc to serve Cycles Pay users.

As Hydro’s vaults will exist on both Arc and the Cosmos Hub, users will eventually be able to deposit funds on one chain and withdraw on the other, without a separate bridging step, all while their USDC keeps earning yield the entire time. That means money set aside to pay bills doesn’t have to sit idle in a zero-yield wallet while it waits and since Cycles Pay relies on those zero-knowledge proofs, all of this happens privately, right from a phone.

What happens to current users?

For users already testing Cycles Pay on Neutron, the transition is designed to be simple:

• The app will soon prompt users with remaining funds on Neutron to bridge them over to Arc, with the app guiding them through the process step by step.

• Anyone starting fresh, or who has already moved funds, will simply use Arc by default going forward.

• Any loyalty points earned during the Neutron beta carry over to Arc 1:1, with bonus points added as a thank-you for joining early 

• The private beta for businesses remains open right up until the official launch on Arc, so there’s still a window to get in early 

Cycles’ new contracts are currently being audited with the goal of being live on Arc from day one of its mainnet launch, already serving real customers.

——————————

What’s happening here is a telling example of a broader trend in crypto: specialized financial infrastructure wants specialized blockchains underneath it, rather than general-purpose ones built for all kinds of applications. Arc is betting that businesses moving real money want predictable costs, instant finality, and built-in privacy and Cycles, whose payment and clearing products are built around that bet, is moving early to be ready when it counts.