Arc Proposal 001

**# Abstract **This proposal outlines a transition from the current $ARC token to an upgraded $ARC token contract. The new $ARC token will have a total supply of 1,030,000,000 tokens—just enough to unify all ARC products under one cohesive token—while introducing a 3% transaction tax to match competitive rates and support team maintenance, buybacks, and burns. This tax would have generated over $3M in revenue last year based on historical transaction volumes. The new token will also feature Burnable (allowing permanent token destruction to increase scarcity and drive up value), Permit (offering gas-efficient off-chain approvals for cheaper interactions), Votes with Timestamp (empowering holders with weighted governance voting for fair decision-making on proposals), and SuperchainERC20 support (enabling seamless cross-chain bridging for expanded usability and reduced fees across compatible networks). We plan to implement buybacks and burns using tax proceeds to reduce the supply back towards 1B tokens over the next year. Additionally, revenue sharing will be integrated as part of Earn with ARC, distributed to holders via simple staking rewards. The migration will be conducted as follows: for standard $ARC holdings, a 1:1 token basis (e.g., 1 old $ARC token for 1 new $ARC token); for $ARC on Virtuals, based on USD value at the time of migration. Holders will have a 1-year window to participate in the transition.

**Motivation **The ARC ecosystem is evolving, and this proposed transition to the upgraded $ARC token contract is driven by the desire to unify all tokens and products within the ecosystem under a single, cohesive token with enhanced capabilities. The new $ARC will combine functionalities from existing tools like Reactor APIs and the upcoming Matrix encrypted AI model network, streamlining operations and user experience. This move also addresses the separation of ARC on ETH and Reactor on Virtuals (vARC), allowing us to consolidate both into one unified token with a total supply of 1,030,000,000—just enough to unify ARC powering the entire product suite. To ensure more optimal development, we propose introducing a 3% transaction tax to match competitive rates, which would have generated over $3M last year, to support buybacks, revenue share, burns (aiming to reduce supply to 1B over a year), and team maintenance through token economics. Revenue sharing will be implemented as part of Earn with ARC, with holders receiving distributions via staking. With this unification, staking will be much simpler, allowing users to receive CPA, ETH and other agent tokens that launch with ARC products like Matrix and Reactor. The current $ARC token contract lacks this built-in support, which can be addressed by the new $ARC token's structure, allowing for ownable access control. This transition will also enhance the ecosystem's resilience by tying rewards more closely to internal utilities, building on recent community discussions about Earn with ARC restructuring, while providing holders with modern smart contract protections and benefits like buybacks and revenue sharing for greater DeFi versatility.

**Rationale **Introducing the new contract for the $ARC token will provide funding for buybacks and supporting the team. The 3% transaction tax, aligned with competitive rates and projected to have yielded over $3M last year, will fund these initiatives, including buybacks and burns to reduce the initial 1,030,000,000 supply back to 1B over a year. This model promotes long-term commitment by discouraging speculative activity while rewarding holders through a stable, utility-driven token. Revenue sharing via staking in Earn with ARC will further incentivize long-term holding. Revenue sharing and buybacks will significantly enhance ARC's utility as well as more frequent community votes, and the ability to use Matrix with your ARC tokens in the future.

The upgrade is structured to be fair: 1:1 token-for-token for standard $ARC, preserving quantity; value-based for $ARC on Virtuals to account for dollar equivalents. Community input indicates support for ecosystem-aligned changes, and this proposal extends that by creating a self-funding mechanism for buybacks and team support. The upgraded $ARC token contract will feature security upgrades, alongside direct funding for buybacks and team support. This model promotes long-term commitment by discouraging speculative activity while rewarding holders through a stable, utility-driven token with new features like Permit for cost-efficient transactions, Votes with Timestamp for direct governance influence, and SuperchainERC20 for cross-chain liquidity and broader adoption opportunities.

The migrations are structured to be fair: 1:1 token-for-token for standard $ARC, preserving quantity; value-based for $ARC on Virtuals to account for dollar equivalents. # **Community input ** from polls indicates support for ecosystem-aligned changes, and this proposal extends that by creating a self-funding mechanism for buybacks and team support. Key Terms & Definitions

Current Token ($ARC): Existing token contract, including on Virtuals, for rewards and utilities. Virtuals Token: The $ARC Token on Virtuals will be reunited within the upgraded $ARC token contract. New $ARC Token: Upgraded token contract with a total supply of 1,030,000,000 tokens (to unify ARC into one token), featuring a 3% transaction tax (matching competitive rates; would have generated over $3M last year) and new capabilities such as Burnable, Permit, Votes with Timestamp, and SuperchainERC20 for enhanced security, utility, and interoperability. Includes plans for buybacks and burns to reduce supply to 1B over a year, plus revenue sharing via staking in Earn with ARC. 1:1 Token Migration: For standard $ARC, direct 1 old token for 1 new token exchange. USD Equivalent Migration: For $ARC on Virtuals, exchange based on the dollar value at snapshot time. Tax Allocation: 3% fee directed to buybacks, burns, team support, and revenue sharing. Transition Window: 1 year from rollout for holders to migration. Specifications Token Supply: Total supply of the new $ARC will be 1,030,000,000 tokens, just enough to unify ARC, with plans to buyback and burn to reduce to 1B over a year. Tax Implementation: 3% tax applied to transactions (matching competitive rates; estimated $3M+ last year), automatically directed to buybacks, burns, team support, and revenue sharing via smart contract. Migration Tool: A secure migration tool that has transacted millions in value seamlessly (1:1 token for standard $ARC; USD equivalent for $ARC on Virtuals) Chain: ETH chain, with cross chain compatibility enhanced by SuperchainERC20 for seamless bridging and reduced fragmentation. Governance: Future adjustments via community votes using $ARC (including on Virtuals), powered by Votes with Timestamp for fair, timestamp-based snapshots that resist attacks and give holders weighted influence. Eligibility: All $ARC holders as of the snapshot date. Steps to Implement Snapshot and Voting: Launch a community vote on Snapshot for 2 weeks; all $ARC holders eligible to vote. Preparation Phase: Prepare and audit the migration tool, new contracts, and operational elements, including integration of features like Upgradeable proxies for added security and future-proofing. Rollout: Activate the migration portal and begin the transition. Handing access to a secure arc held multi sig Ongoing Support: Maintain the 1-year window with community updates. **Timeline ** Weeks 1-2 (July 14 - July 27, 2025): Community voting on Snapshot. Engage via TG, Discord, and X for discussions. Week 3 (July 28 - August 3, 2025): Preparation for 1:1 token migrations(standard $ARC and dollar equivalent exchanges for $ARC on Virtuals). Develop new $ARC smart contracts using OpenZeppelin's secure libraries, ensuring a simple and secure upgrade process. Handle operational aspects like token migration and liquidity. Lock in token address and announce ahead of time for security Week 4 (August 5 - August 10, 2025): Smooth transition rollout. Launch the migration portal. Announce the 1-year window for $ARC holders to transition to the new $ARC. Post-week 4: the 1-year migration window remains open until August 10, 2026. Disclaimer

This proposal is for informational purposes only and does not constitute financial, investment, legal, tax, or any other form of advice. Participation in the proposed token transition, migration, or any related activities involves significant risks, including but not limited to the potential for total loss of principal, volatility in cryptocurrency markets, technical failures, regulatory changes, and security vulnerabilities. Past performance, including any referenced historical data or projections (such as tax revenue estimates), is not indicative of future results. Forward-looking statements in this document, including plans for buybacks, burns, revenue sharing, feature implementations, or timelines, are based on current assumptions and are subject to change without notice; actual outcomes may differ materially. The ARC team makes no representations or warranties, express or implied, regarding the accuracy, completeness, or suitability of the information provided. Users are solely responsible for conducting their own due diligence, assessing risks, and complying with applicable laws in their jurisdiction. By reviewing or participating in this proposal, you acknowledge that you are doing so at your own risk and agree to hold harmless the ARC team, its affiliates, developers, and contributors from any claims, damages, or liabilities arising from your actions. Consult with qualified financial, legal, and technical advisors before making any decisions. This proposal may be modified or withdrawn at any time without liability.