Key Points
- Ark Labs is a new company focused on creating a Bitcoin Layer 2 payments network based on the Ark protocol.
- The Ark protocol aims to simplify user experience while preserving self-custody, working in conjunction with the Lightning Network.
Ark Labs was launched on Tuesday, with the goal of creating a Bitcoin Layer 2 payments network using the Ark protocol.
Ark Labs contends that while the Lightning Network – a second-layer solution of payment channels built on the Bitcoin blockchain – has facilitated quicker, less expensive payments, the necessity to manage channels and liquidity has pushed many users towards custodial Lightning wallets, sacrificing control over their funds for ease.
The Ark Protocol
The Ark protocol, first mooted in 2023, is a Bitcoin Layer 2 scaling solution that works in tandem with the Lighting Network, with the goal of providing a more streamlined user experience while maintaining self-custody.
The CEO of Ark Labs, Marco Argentieri, stated that if covenants were activated on the Bitcoin network, it could offer numerous beneficial optimisations for Ark users. However, he also pointed out that Ark is already feasible on Bitcoin today and with the launch of Ark Labs, Ark is becoming a reality, enabling users to start benefiting from seamless, scalable transactions immediately.
Functioning of the Ark Protocol
Unlike the Lightning Network, Ark protocol users do not need to manage payment channels or inbound/outbound liquidity to make payments. Users also do not need to set up their own nodes, only requiring a light wallet on a smartphone to start sending and receiving self-custodial Ark payments, according to the team.
Ark consists of a network of Ark Service Providers (ASPs) that users can connect to via Ark-compatible wallets. An ASP is a trustless server that issues “virtual transactions” to a user upon deposit, which can then be transferred at low cost between users of the same ASP, sent to users of different ASPs over Lightning or redeemed on-chain at any time.
The team added that by ensuring users can redeem on-chain, they can be confident they are in full control of their funds, even if their ASP goes offline. ASPs can collect transaction fees from users making payments inside the Ark layer.
Ark Labs is backed by a grant from bitcoin-native financial services firm Vulpem Ventures and led by a team of seasoned Bitcoin developers. The company will lead the maintenance of an open-source implementation of the Ark protocol, now available for anyone to build an ASP or Ark-enabled wallet. Ark Labs stated it already has several commercial services in development leveraging the protocol, with the first application expected to launch later this year.
Cory Klippsten, Swan Bitcoin CEO and Ark Labs advisor, said that it’s becoming clear that Bitcoin needs more alternatives for scaling and that Ark is at the top of their list. He added that they’re looking forward to finding ways of integrating it to deliver more options for efficient deposits, withdrawals, and payments.
Bitcoin Network Transactions at Peak Levels
The launch of Ark Labs comes at a time when the seven-day moving average of daily transactions on the Bitcoin network is near all-time highs of 720,000, boosted by the success of Ordinals and Runes. However, increased transaction volume can lead to congestion delays and higher fees, demonstrating the need for more scalable payment solutions on Bitcoin.
The Lightning Network carries some of that burden but is currently limited to a capacity of 5,100 BTC ($350 million).
