Ark Introduction: A Layer 2 Protocol for Anonymous Bitcoin Payments Off-Chain

Ark Introduction: A Layer 2 Protocol for Private Bitcoin Transactions

Ark allows the payee to receive payments without obtaining inbound liquidity, while also preserving the payee’s privacy. Encryption researcher Burak outlined the working mechanism of a new Bitcoin payment layer protocol Ark in comparison to Lightning Network.

Ark implements anonymous and scalable off-chain payments through an Ark Service Provider (ASP). Ark is a trustless layer two protocol with unilateral exit capabilities that cannot steal user funds or link senders and receivers. Users have the right to self-custody and can recover their funds to the base layer if there are issues with the layer two. Additionally, Ark has an off-chain utxo set called virtual utxos or vtxos.

Ark settles every 5 seconds, and users need to wait for on-chain confirmation to be considered final. However, this does not prevent them from using zero-conf tokens to pay invoices, as Ark has instant usable latency finality. Ark ensures absolute atomicity by using ATLCs instead of HTLCs. Users can receive payments and forward them without waiting for confirmation. Double-spending at the mempool level will break atomicity.

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Compared to the Lightning Network, Ark provides better privacy, as every payment on the protocol is mixed in a coinjoin round, obscuring the trace from sender to receiver. On the other hand, Lightning payments are linked through hashlock identifiers, and intermediaries can collude to extract payment information and break the link between sender and receiver. Additionally, Lightning payments do not scale well on-chain.

Reference: https://burakkeceli.medium.com/introducing-ark-6f87ae45e272

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