> ## Documentation Index > Fetch the complete documentation index at: https://docs.arc.io/llms.txt > Use this file to discover all available pages before exploring further. # System overview > Arc separates consensus from execution across two layers: Malachite orders and finalizes blocks, Reth processes transactions and maintains state. Arc is a two-layer blockchain. The **consensus layer** (Malachite) orders transactions and finalizes blocks. The **execution layer** (Reth) processes those transactions, applies state changes, and produces a new state root. This separation lets each layer optimize independently while delivering sub-second deterministic finality and full EVM compatibility. ## Two-layer architecture ### Consensus layer (Malachite) The consensus layer runs [Malachite](/arc/concepts/consensus-layer), a high-performance implementation of the Tendermint BFT protocol. Its job is to agree on transaction order and finalize blocks across a permissioned validator set. Malachite uses a two-phase voting process (pre-vote and pre-commit) that requires more than two-thirds of validators to agree before a block is committed. Once committed, the block is final and irreversible. Key properties: * **Deterministic finality** in under one second, with no reorganization risk * **High throughput** of 3,000+ TPS with 20 validators (benchmarked at \<350 ms finality) * **Proof-of-Authority** validator set composed of regulated institutions ### Execution layer (Reth) The execution layer runs [Reth](/arc/concepts/execution-layer), a Rust implementation of the Ethereum execution client. It maintains the full blockchain state (accounts, balances, contracts, storage), executes EVM transactions, and extends the standard execution pipeline with Arc-specific modules. Core responsibilities: * **Maintain the ledger** -- track accounts, balances, smart contracts, and transaction history * **Execute transactions** -- apply EVM logic, deduct gas fees, and route through Arc modules * **Produce the state root** -- compute a Merkle root of the updated state for consensus to finalize ## Transaction lifecycle A transaction moves through both layers in sequence. The consensus layer orders and finalizes, then the execution layer processes and applies state changes. ```mermaid theme={null} flowchart LR A["Submit via\nJSON-RPC"] --> B["Mempool\n(validation)"] B --> C["Proposer bundles\ninto block"] C --> D["Pre-vote\n(validity check)"] D --> E["Pre-commit\n(2/3+ threshold)"] E --> F["Commit\n(block finalized)"] F --> G["Execution\n(EVM + modules)"] G --> H["State root\n(Merkle hash)"] style A fill:#f5f5f5,stroke:#333 style F fill:#e8f5e9,stroke:#2e7d32 style H fill:#e8f5e9,stroke:#2e7d32 ``` 1. **Submit.** A user or application sends a signed transaction to an Arc node via JSON-RPC. 2. **Mempool.** The node validates the transaction for correctness (valid signature, sufficient balance, proper nonce) and holds it in the transaction pool. 3. **Propose.** A rotating validator is selected as proposer for the current round. It bundles pending transactions from the mempool into a candidate block and broadcasts it to the validator set. 4. **Pre-vote.** Each validator evaluates the proposed block and broadcasts a vote indicating whether the block is valid. 5. **Pre-commit.** Validators broadcast a second round of votes. If more than two-thirds of validators pre-commit to the same block, the block proceeds to commit. 6. **Commit.** The block is finalized and appended to the chain. Every transaction in the block is now irreversible. 7. **Execution.** Reth applies each transaction to the current state. The EVM processes smart contract logic and transfers, while Arc modules (Fee Manager, and in the future, ArcaneVM and Stablecoin Services) handle their respective functions. 8. **State root.** Reth computes a Merkle root of the updated state. This root serves as a cryptographic commitment to the entire post-block state. The entire lifecycle completes in under one second. For a deep dive into the consensus protocol, see [consensus layer](/arc/concepts/consensus-layer). For details on how Reth processes transactions, see [execution layer](/arc/concepts/execution-layer). ## Arc-specific modules Arc extends the standard EVM execution pipeline with modules that provide stablecoin-native capabilities. These modules run inside the execution layer and process transactions alongside standard EVM logic. | Module | Status | Function | | :--------------------------------------------------------------- | :------ | :----------------------------------------------------------------------------------------------------------- | | **[Fee Manager](/arc/concepts/stable-fee-design)** | Live | Stabilizes gas fees using USDC as the unit of account. Uses EWMA smoothing to prevent short-term fee spikes. | | **[ArcaneVM](/arc/concepts/opt-in-privacy)** | Planned | Confidential execution environment for Solidity contracts, composing synchronously with the public EVM. | | **[Stablecoin Services](/arc/concepts/stablecoin-native-model)** | Planned | Powers crosscurrency settlement, paymaster-sponsored transactions, and multi-stablecoin gas payments. | ArcaneVM and Stablecoin Services are on the roadmap and not yet available on Arc. Arc also includes the **CallFrom precompile**, which preserves `msg.sender` across delegated calls. This precompile is used by the Memo contract and Multicall3From to enable batched and annotated transactions. For details on how these differ from standard Ethereum behavior, see [EVM compatibility](/arc/references/evm-differences). ## Developer benefits * **Instant settlement.** Deterministic finality means you can trigger downstream actions (webhooks, database writes, notifications) as soon as a block commits, with no confirmation polling or reorg handling. * **Familiar stack, native extensions.** Deploy Solidity contracts with standard Ethereum tooling. Fee stabilization, privacy, and stablecoin primitives are built into the execution layer, not bolt-on services.