Building Services Beyond the Lightning Network — Inside Arkade's Programmable Bitcoin Layer

**Andrew Camilleri** (0:00)
The easiest way to explain Ark is that it's an on-chain batching mechanism, meaning that you have a single on-chain Bitcoin transaction with one output, basically a claim to multiple people's ownership of Bitcoin. Our system is a bit more non-biased towards the purpose of what you're doing, how you're transacting. If you wanted to do a multi-sig on Bitcoin, you can do it at Arkade.
If you wanted to do time logs and hash log contracts, you can do it. We want to do a general purpose off-chain environment.

**Shinobi** (0:34)
Hey, everybody, I'm Shinobi from Bitcoin Magazine, joined by Mr. Kukks from Ark Labs. And we are here today to talk a little bit about Ark and Arkade. So depending on the order these get published, viewers might have already seen a talk with Matthew Vuk from Seconds.
So just to kind of compress a little bit, you want to give like a short TLDR of what Ark is. Just at a basic level and then we can move to Arkade and like what you guys are doing specifically.

**Andrew Camilleri** (1:06)
Yeah.
So let's talk about Ark. The easiest way to explain Ark is that it's an on-chain batching mechanism, meaning that you have a single on-chain Bitcoin transaction with one output and this output is what we call a batch. And this batch is basically a claim to multiple people's ownership of Bitcoin. Essentially, if you have four people that have 0.25 Bitcoin each, the output would be one Bitcoin. And then from that point, from that on-chain output, you would have a series of pre-signed transactions that kind of deliver each one's claim, which we call VTXOs.

**Shinobi** (1:53)
And how exactly does kind of the batch creation process and like actually transferring those VTXOs work?

**Andrew Camilleri** (2:02)
Batch creation process is kind of a coordination process. People show up with their, whether it's boarding new TXOs, basically their own on-chain Bitcoin, or whether they have existing VTXOs that they would like to renew or settle. They show up, they register an intent with the arcade operator. The arcade operator will group these intents by users together, and then start the coordination process, which we call a cession, a batch cession.
They will essentially construct the tree, the virtual transaction tree together, and the on-chain transaction as well.
If you're bringing your own UTXOs, that means you add them as an input to the transaction. If you're bringing existing VTXOs in the ARK system, you create this thing called the forfeit transaction. And the forfeit transaction is basically, the easiest way to look at it is like an atomic swap between your existing VTXO for a new one in the new batch, using this thing called the connector output. But I won't get into that.

**Shinobi** (3:14)
Okay, and so like the general idea is essentially like a way to transfer coins off-chain in a similar way to lightning, but rather than having to create like a bilateral relationship with a specific person, anyone willing to interact with the coordinator is somebody that you can just freely transfer that to.

**Andrew Camilleri** (3:35)
If you look at the core Ark protocol in itself, it's really just an on-chain way to group people together in one output. What you do after that, if you want to do transfers between people off-chain, that's a whole different section of the whole system, which we call the virtual mempool, where essentially you have VTXOs. VTXOs are really just a series of un-broadcasted Bitcoin transactions. So any VTXO can really become a UTXO.
And if you want to transfer your VTXO or you want to do a transaction that does whatever, sending money back to yourself, splitting up some values, paying multiple people, a normal Bitcoin transaction kind of thing, you just create a real Bitcoin transaction. You sign it, you send it to the operator who co-signs it as well and sends it back to the user. And now you've just created new VTXOs and you burnt your old VTXOs.
Okay.

**Shinobi** (4:35)
And so you guys have kind of gone a very different direction than seconds with your Arkade system. And the goal is to, rather than just be a payment processing system, like actually allow kind of a flexible programmability for what users are doing with their money.
You kind of want to give us like a broad overview of like the architecture here and like how this actually works.

**Andrew Camilleri** (5:04)
I think the biggest difference is that our system is a bit more non-biased towards the purpose of what you're doing, how you're transacting. Just like on Bitcoin, we want you to be able to express your own unlocking scripts. Essentially, like if you want to do a multi-sig on Bitcoin, you can do it in Arkade. If you wanted to do time logs and hash log contracts, you can do it.