🧠 Ark Protocol — FAQ

A foundation for Bitcoin-native, offchain coordination

❓ Is Ark custodial?

No. Ark is a self-custodial protocol. Users retain control of their funds through presigned Bitcoin transactions that enable unilateral exit to the base layer at any time.

Offchain transactions in Ark allow for fast coordination, while final settlement on Bitcoin ensures full security and immutability. Every VTXO includes an enforceable exit path, preserving user custody throughout the transaction lifecycle.

❓ What happens if the Operator disappears or acts maliciously?

Ark is designed to minimize trust while preserving user control.

• Operator offline: Users can exit unilaterally using presigned Bitcoin transactions. Each VTXO includes a withdrawal path that can be broadcast independently to reclaim funds onchain.
• Operator misbehavior: Any conflicting transactions signed by the Operator are cryptographically provable. Users can fall back to their latest valid VTXO and broadcast it onchain. Settlement depends on which version confirms first on the Bitcoin chain.

These mechanisms ensure users always retain an enforceable exit path to Bitcoin. Operator misconduct does not compromise base‑layer security, and user clients can detect violations in real time to take appropriate action.

❓ Why do VTXOs expire?

VTXO expiry ensures:

• Recycled liquidity: Stale outputs are freed up for new batches.
• Operator liability limit: The Operator isn't indefinitely responsible for old outputs.
• User liveness incentive: Encourages users to finalize or renew positions.

This is analogous to Lightning channel timeouts: it enforces liveness and prevents indefinite offchain state accumulation. Expiry information should be clearly surfaced in wallets and SDKs.

❓ What happens if my VTXO expires?

When a Batch Output expires:

• The Operator gains the right to reclaim any unspent value within it.
• Users lose the ability to unilaterally exit that specific VTXO.
• However, users may register expired-but-unspent VTXOs with the Operator and request reissuance.

This reissuance is not guaranteed—after expiry, users must trust the Operator to cooperate. Clients should monitor expiry and automate settlement before the deadline.

❓ Is Ark a sidechain or rollup?

No. Ark is neither a sidechain nor a rollup.

• There is no separate chain or validator set.
• There are no bridges or wrapped assets.
• Ark uses Bitcoin itself for settlement and exits.

Ark introduces a new form of offchain execution—not a consensus layer—where coordination happens offchain, but every participant retains Bitcoin‑enforceable claims at all times.

❓ Does Ark require covenants?

No. Ark works on Bitcoin today, with no new opcodes, no forks, and no consensus changes.

That said, covenants could enhance Ark’s expressiveness and reduce reliance on presigning. But they are not required for Ark’s core guarantees.

❓ Is Ark an extension of Lightning?

No. Ark is a standalone protocol.

• Lightning relies on interactive payment channels and pathfinding.
• Ark is non‑interactive and UTXO‑based, enabling payment coordination without channel setup or routing.

Ark can interoperate with Lightning via swap providers who settle VTXOs in and out of the protocol.

❓ How many VTXOs can be created in one transaction?

Currently, Ark targets up to 128 VTXOs per Batch Output. This is a soft limit—batch creation can be parallelized across multiple outputs in a single Commitment Transaction, allowing for future scaling improvements.

❓ Can users transfer VTXOs between each other offchain?

Yes—Ark enables offchain transfer of ownership via signed Ark transactions.

However, these preconfirmed VTXOs are not yet Bitcoin‑final. Until they’re settled onchain in a new Batch Output, they carry soft guarantees—similar to a check that’s valid but not yet deposited. Wallets should track each VTXO’s status (originated, forwarded, settled) and notify users of associated risks.

❓ What’s the difference between preconfirmation and Bitcoin finality?

• Preconfirmation: The Operator has co‑signed your Ark transaction. You can now use your VTXO in further offchain transactions.
• Bitcoin finality: Your VTXO has been committed to the Bitcoin blockchain via a Batch Swap, gaining full immutability and the strongest security guarantees.

Most day‑to‑day flows occur in preconfirmed space, but users can opt to settle to Bitcoin at any time—especially before expiry or when highest security is needed.

❓ What are Batch Outputs?

A Batch Output is a single Bitcoin UTXO controlled by a multi‑party agreement (n‑of‑n multisig), from which multiple offchain claims (VTXOs) are derived.

Think of it as a collaborative vault: the Operator and all participants pre‑sign valid exit strategies for each VTXO, ensuring any user can claim their funds independently if needed.

❓ Can small payments be enforced?

Not directly. VTXOs below the dust threshold are not independently enforceable on Bitcoin. These micro‑payments are tracked offchain, but users must aggregate them into a larger VTXO or request swap settlement. This aligns with Bitcoin’s UTXO model—there’s no mechanism for sub‑dust amounts to be finalized onchain without protocol changes.