Ark Labs Launches to Build New Self-Custodial Bitcoin Layer 2 Network

Ark Labs, a new company focused on developing a self-custodial Bitcoin Layer 2 payments network, officially launched on Tuesday. This network leverages the Ark protocol, aiming to simplify Bitcoin payments while maintaining user control over funds.

While acknowledging the benefits of the Lightning Network (LN) in enabling faster and cheaper Bitcoin transactions, Ark Labs highlights the need for channel management and liquidity as a barrier to entry. This often pushes users towards custodial LN wallets, sacrificing self-custody for convenience.

The Ark Protocol: A Simplified Layer 2 Solution

Proposed in 2023, the Ark protocol offers an alternative Layer 2 scaling solution for Bitcoin. It operates alongside the Lightning Network, aiming to provide a more user-friendly experience while preserving self-custody.

Unlike the Lightning Network, users within the Ark ecosystem don’t require managing payment channels or inbound/outbound liquidity. Additionally, setting up personal nodes becomes unnecessary. Transactions can be sent and received using just a light wallet on a smartphone, according to the Ark Labs team.

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How Ark Works

The Ark network relies on Ark Service Providers (ASPs) that users connect to through Ark-compatible wallets. ASPs function as trustless servers. Upon receiving a deposit, they issue “virtual transactions” to users. These virtual transactions can be:

Transferred at minimal cost between users within the same ASP.

Sent to users on different ASPs via the Lightning Network.

Redeemed directly on the Bitcoin blockchain at any time.

“By enabling on-chain redemption, users retain full control over their funds even if their chosen ASP goes offline,” the Ark Labs team emphasizes. ASPs have the ability to collect transaction fees from users making payments within the Ark layer.

Open-Source Development and Commercial Applications

Ark Labs operates under the leadership of experienced Bitcoin developers and receives funding through a grant from bitcoin-native financial services firm Vulpem Ventures. The company will manage an open-source implementation of the Ark protocol, allowing anyone to build ASPs or Ark-enabled wallets.

Several commercial services leveraging the Ark protocol are already under development by Ark Labs, with the first expected to launch later in 2024.

“It’s evident that Bitcoin needs more scaling solutions,” said Cory Klippsten, CEO of Swan Bitcoin and an advisor to Ark Labs. “We’re constantly evaluating new technologies that can improve our Bitcoin services, and Ark is at the forefront. We’re excited to explore ways to integrate Ark to offer users more options for efficient deposits, withdrawals, and payments.”