Informal Systems Announces Malachite Acquisition by Circle to Power New Arc Blockchain Network

Rhea-AI Summary

Circle (NYSE:CRCL) has acquired Malachite, a high-performance Byzantine Fault Tolerant (BFT) consensus engine, from Informal Systems to power its new Layer-1 blockchain network, Arc. The acquisition will support Circle's development of a purpose-built blockchain for stablecoin finance, with testnet launch expected later in 2025.

Malachite, which implements the Tendermint algorithm with a focus on correctness and efficiency, will remain open source under the Apache 2.0 license. Several Informal Systems team members will transition to Circle to support Arc's development, while Informal Systems continues to advance other projects and maintain industry collaborations.

Positive

• Strategic acquisition strengthens Circle's blockchain infrastructure for stablecoin payments
• Malachite will remain open source, ensuring continued industry access and innovation
• Key team members from Informal Systems joining Circle to support development
• Technology validation from a major financial technology company

Negative

• Potential brain drain from Informal Systems as team members transition to Circle
• Integration and development risks associated with new blockchain platform launch

Insights

Blockchain Technology Analyst

Circle's acquisition of Informal Systems' Malachite consensus engine establishes strategic positioning in the Layer-1 blockchain infrastructure for stablecoin finance.

Circle's acquisition of Informal Systems' Malachite consensus engine represents a significant strategic move in the blockchain infrastructure space. The Byzantine Fault Tolerant (BFT) consensus engine will power Circle's new Arc blockchain network, specifically designed for stablecoin finance and scheduled for testnet launch later this year.

This acquisition is particularly noteworthy because it gives Circle proprietary control over a critical component of blockchain infrastructure while maintaining the open-source nature of the technology. By integrating Malachite's Tendermint-based algorithm, Circle gains a purpose-built foundation for its stablecoin ecosystem that prioritizes performance, security, and reliability—three critical factors for financial applications.

The technology transfer includes not just the software but also key talent, with several Informal team members joining Circle to continue Arc's development. This human capital acquisition is often as valuable as the technology itself in the blockchain sector. For Informal Systems, this represents a successful exit for one of their incubated projects while allowing them to continue supporting other Malachite implementations.

From an industry perspective, this move signals Circle's ambitions to control more of its technology stack rather than building atop existing general-purpose blockchains. By developing Arc as a stablecoin-focused Layer-1, Circle is positioning itself to optimize specifically for financial transactions rather than accommodating the broader use cases that make general-purpose blockchains less efficient for payments. This vertical integration strategy could potentially deliver competitive advantages in transaction costs, speed, and reliability for USDC and other Circle products.

High-performance BFT consensus engine powers Circle's new stablecoin-focused Layer-1 blockchain launching in testnet later this year.

TORONTO, Aug. 18, 2025 /PRNewswire/ -- Informal Systems, a leader in blockchain infrastructure and protocol design, announced on August 12 that its high-performance consensus engine, Malachite, has been acquired by Circle Internet Group, Inc. (NYSE: CRCL) (Circle), a global financial technology firm, to support the launch of Arc¹, a new open Layer-1 blockchain network purpose-built for stablecoin finance. Arc is expected to debut in testnet later this year.

Founded by experts in formal methods and distributed systems, Informal Systems builds transformative technologies to foster trust in software and money. Malachite is the product of years of pioneering work in consensus and verifiability—a Byzantine Fault Tolerant (BFT) consensus engine implementing the Tendermint algorithm in a modular design focused on correctness and efficiency. Originally developed to meet real-world demands for a flexible, reusable foundation for decentralized systems.

Circle's integration of Malachite will help bring greater performance, reliability, and security to stablecoin-based payments, reinforcing Malachite's mission to deliver trustworthy, low-cost, and borderless financial infrastructure. The Malachite repository will remain open source under the Apache 2.0 license, ensuring continued industry access and innovation.

"This acquisition is a strong validation of Malachite and of our incubation model," said Ethan Buchman, CEO at Informal Systems. "Circle's adoption of Malachite provides a high-impact use case, a robust financial foundation for future development, and ensures our technology contributes to meaningful, mission-aligned outcomes."

The acquisition aligns with Informal's broader strategy of spinning out incubated projects to accelerate their growth. Alongside Malachite, Informal is advancing initiatives such as Cycles, Hydro, and Quint, a leading tool for complex distributed systems that supported Malachite's development. Several Informal team members will join Circle to drive Arc's development, while Informal continues to support other Malachite use cases and collaborate with industry partners on next-generation blockchain applications.

"We're proud of the exceptional talent and technical depth nurtured at Informal," said Arianne Flemming, COO. "This transition reflects our commitment to ensuring that the technologies we create serve the most transformative purposes possible."

Informal will continue working with leading teams on protocol design and cross-chain infrastructure, offering engineering and security expertise to organizations building with Malachite and beyond. For collaboration inquiries, contact hello@informal.systems.

¹ Arc is offered by Circle Technology Services, LLC ("CTS"). CTS is a software provider and does not provide regulated financial or advisory services. You are solely responsible for services you provide to users, including obtaining any necessary licenses or approvals and otherwise complying with applicable laws.

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SOURCE Informal Systems

FAQ

What is Circle (NYSE:CRCL) acquiring from Informal Systems?

Circle is acquiring Malachite, a high-performance Byzantine Fault Tolerant (BFT) consensus engine that implements the Tendermint algorithm, to power its new Arc blockchain network.

When will Circle's Arc blockchain network launch?

Circle's Arc blockchain network is expected to launch in testnet later in 2025.

Will Malachite remain open source after Circle's acquisition?

Yes, Malachite will remain open source under the Apache 2.0 license, ensuring continued industry access and innovation.

What is the purpose of Circle's new Arc blockchain?

Arc is a new Layer-1 blockchain network specifically designed for stablecoin finance, aimed at bringing greater performance, reliability, and security to stablecoin-based payments.

How will this acquisition affect Informal Systems' team?

Several team members from Informal Systems will transition to Circle to drive Arc's development, while Informal continues to support other projects and maintain industry collaborations.