Ark: An anonymous off-chain payment protocol based on Bitcoin
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Ark: An anonymous off-chain payment protocol based on Bitcoin
In this article, we will follow in Burak's footsteps to explore the inner workings and advantages of Ark, as well as the motivations behind starting this project.
Navigating Web3 tides with focused insightsAuthor: Burak
Translation: TechFlow
Ark is a revolutionary Layer-2 protocol designed to provide low-cost, anonymous off-chain payment solutions for Bitcoin. By combining privacy with low costs, Ark offers users an entirely new payment experience. In this article, we will follow Burak’s journey to deeply understand Ark's working principles, its advantages, and the motivations behind developing this project.
Ark enables recipients to receive payments without requiring inbound liquidity, protecting recipient privacy. The protocol is as private as WabiSabi, as convenient as on-chain transactions, and as cheap as the Lightning Network. Before diving into technical details, let me first share my story.
As someone originally aligned with the big-block camp, I was once a major critic of the Lightning Network myself. I had strong objections to the Lightning Network, primarily focused on inbound liquidity, asynchronous receiving, and on-chain footprint issues.
Over time, as I learned more about the Lightning Network, I realized some of my concerns could be addressed. For example, PTLC solves both asynchronous receiving and proof-of-payment problems, while the shared UTXO model partially mitigates on-chain footprint concerns.
Unfortunately, however, I couldn't find a "silver bullet" to solve the inbound liquidity problem. Inbound liquidity always felt like a bug to me—an anomaly that shouldn't exist. The entire issue just felt wrong.
Imagine doing a simple market survey before designing the LN: "Would you use a payment system that requires you to run a server 24/7 and only works if you first acquire liquidity?" Can you imagine what kind of user experience that would be?
The ideal end-user experience must be seamless. Users should simply press a magic button to receive sats and another to send sats—just like moving funds on-chain.
Anyway, over time, I came up with several interesting solutions to address my UX concerns, which eventually led me to design a new LN wallet. At one point, I realized what I was building no longer resembled the Lightning Network—it was becoming more like a distinct Layer-2 protocol. A Layer-2 that can pay Lightning invoices and receive payments from the Lightning Network, yet internally, at its core, follows a completely different design.
Long story short, my idea for a Lightning wallet evolved into a new Layer-2 protocol. I've been discussing it within my close circle, gathering private feedback, and iterating on the design.
After months of refactoring and iteration, I realized I now have the most optimized design possible, and the technology feels mature enough to share my work with the broader community. This is Ark.
I named it Ark because it resonates with Noah's Ark—a vessel that saves ordinary people from threats posed by chain analysis firms and custodians. Self-hosted Lightning fails for obvious reasons, and chain analysis companies pose serious threats to user privacy.
Ark enables anonymous and scalable off-chain payments through a service provider called the Ark Service Provider (ASP). The ASP is a constantly online server that provides liquidity to the network, functioning similarly to how Lightning Network service providers operate.
Ark is a trustless Layer-2 protocol with unilateral exit capabilities—ASPs cannot steal user funds or link senders and receivers. Users retain self-custody rights; if anything goes wrong at Layer-2, they can recover their funds back to the base layer. Additionally, Ark features an off-chain UTXO set known as virtual UTXOs or vTXOs.
Existing virtual UTXOs are destroyed when spent, and new ones are continuously created—mimicking the way on-chain funds flow.
Ark settles every 5 seconds, and users must wait for on-chain confirmation to achieve finality. However, this doesn't prevent them from using zero-conf tokens to pay invoices—Ark provides instant spendability with probabilistic finality.
Ark ensures "absolute atomicity" by using ATLCs instead of HTLCs. Users can receive payments and forward them immediately without waiting for confirmations. Double-spends at the mempool level break atomicity—if the ASP double-spends the recipient’s vTXO, they cannot redeem the sender’s vTXO.
Compared to the Lightning Network, Ark provides an order-of-magnitude higher level of privacy. Every payment on the protocol occurs within a CoinJoin round, obfuscating the trail from sender to receiver. In contrast, Lightning payments are linked via hashlock identifiers, allowing intermediate hubs to collude and extract payment metadata, breaking the connection between sender and receiver.
The Lightning Network also struggles to scale in terms of on-chain footprint. It is a Layer-2 heavily dependent on the base layer. Recent high-fee markets have somewhat demonstrated the unreliability of Lightning infrastructure.
The numbers speak for themselves: assuming each person needs four channels and opening a channel consumes hundreds of vBytes on average, onboarding the global population non-custodially onto the Lightning Network would take over 100 years.
You might argue that channels could be batched under coin pools or factories, but you still need frequent on-chain interaction to close channels. Considering these closures appear as TLUVs, the Bitcoin block space cannot handle the volume of roughly 150,000 daily channel closures.
(TechFlow Note: "TLUV" is a concept related to Tapscript, standing for "TAPLEAF_UPDATE_VERIFY." It allows specifying a tweak to modify the current internal key and can be used in Tapscript for more flexible control over transaction conditions and key management. It enables more complex transaction scripts, making Bitcoin transactions more flexible and scalable.)
Ark checks nearly all boxes; it scales Bitcoin transactions through various components: shared UTXO model, blind signatures, simple tweaking, timelocks, ATLCs, and several other clever techniques.
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