http://en.wikipedia.org/wiki/Melty_Blood
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Basically an Arc Drive is going into Heat mode and doing a qcf+c. It's like a super in MvC only more badass. A Last Arc is when the player Goes into blood Heat mode, and parries an oppenents attack. the position required during the Parry is character dependant. After Parrying an attack the player does a super damaging move called the Last Arc. finishing with either Arc Drive or Last Arc is considered the most embarrasing thing to have done to to you other than a Perfect.