Ark

Ark is an off-chain protocol for fast, low-cost Bitcoin payments that avoids the inbound-liquidity and channel-management burdens of Lightning. It works by letting many users share batched on-chain UTXOs while holding spendable balances as virtual UTXOs (vTXOs) off-chain. An intermediary called the Ark Service Provider (ASP) coordinates rounds, acting as a liquidity provider and a kind of blinded CoinJoin coordinator.

Virtual UTXOs and rounds

A vTXO is a pre-signed transaction that guarantees its holder can put a real, unilaterally controlled UTXO on-chain if needed, but is otherwise kept off-chain. The ASP packs many users' vTXOs into a tree of pre-signed transactions rooted in a single confirmed UTXO. Each vTXO is protected by a 2-of-2 script (user plus ASP), with a timelock path that lets the user reclaim funds alone if the ASP disappears. vTXOs are short-lived and expire, typically after a few weeks, so balances are periodically refreshed.

Tradeoffs

Ark can run on Bitcoin today, but without covenant opcodes such as the proposed CTV (BIP-119), every participant in a round must be online to co-sign, which limits scale. Covenant support would make rounds far more efficient. The ASP must be trusted for liveness and to refund correctly, though it cannot steal funds outright thanks to the unilateral-exit paths.

D-Central covers Ark neutrally as one of several emerging second-layer designs, alongside statechains and channel-based systems. See the Ark Labs documentation for the current specification.