Circle has announced a significant partnership with prediction market platform Polymarket, as the platform undergoes its 'biggest change to date' by overhauling its entire exchange infrastructure. Rather than using USDC directly, Polymarket is wrapping it into a branded settlement token, with automatic frontend conversion for users while underlying reserves remain in USDC. This strategic move allows Circle to capture interest income on every dollar in the system, as Polymarket volume translates directly to more USDC locked in smart contracts. Circle also revealed its Layer-1 blockchain Arc will debut with quantum-resistant wallet features at mainnet, with USDC as the native gas token and a projected late 2026 launch. The announcement comes as Circle positions itself to capture demand from the AI agent economy through sub-cent transaction fees.