This article contains speculation, information which has not been confirmed by a reliable source. The game is still in development, and all information is subject to change.
"... a means of using high levels of energy to fold time and space in on itself, effectively creating a wormhole capable of transporting matter large distances in a matter of seconds. Early forms of arcfolding required massive amounts of energy to transport relatively small objects only a few kilometers away. As the technology was further developed, arcfolding could be accomplished with larger, more complex materials and sent farther distances. However, it quickly reached a technological plateau, becoming notoriously unreliable in its accuracy."
Arcfolding can occur naturally if two Quasars (beams of high energy particles created by black holes) are running parralel to each other at a close enough distance. This can actually fold space along the line between the two Quasars.
More detail to come later