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Offchain Execution

Ark introduces an offchain execution environment designed to facilitate efficient, low-latency Bitcoin transactions without requiring changes to Bitcoin’s consensus rules. This environment enables users to exchange Virtual Transaction Outputs (VTXOs) via Ark Transactions, which are coordinated offchain and remain enforceable through Bitcoin's native scripting capabilities.

By executing transactions offchain, Ark reduces network congestion and onchain fee pressure while preserving self-custody and enabling unilateral exit paths.

Ark Transactions​

Ark Transactions are virtual transactions that spend existing VTXOs and create new ones. While these transactions are constructed using valid Bitcoin semantics and are capable of being broadcast if necessary (e.g., in the case of exit), they are primarily executed offchain.

Each transaction is cosigned by an Ark Operator, ensuring orderly coordination and state integrity within the offchain layer.

Execution Flow​

  1. Transaction Preparation
    The user prepares a transaction that spends one or more VTXOs and produces new VTXOs. This includes:

    • Valid witness data for each input (excluding the Operator’s signature)
    • Correct output scripts for new VTXOs

  2. Submission and Verification
    The transaction is submitted to the Ark Operator, who verifies:

    • Input VTXOs are valid and unspent
    • Script constraints and policy rules are satisfied
    • No conflicts with existing VTXOs or transaction history

  3. Cosignature and Completion
    If valid, the Ark Operator adds their signature and the transaction is accepted into the VTXO state.

  4. State Update
    The input VTXOs are marked as spent, and the new VTXOs become eligible for further offchain transactions or eventual confirmation via batch swap.

Trust Assumptions​

Offchain execution introduces new security tradeoffs. VTXOs created by Ark Transactions exist in a preconfirmation state until they are incorporated into a confirmed Batch Output via a Batch Swap.

Risk Model​

  • Preconfirmation state:
    VTXOs exist offchain and rely on honest behavior from the Operator. Malicious behavior (e.g., signing conflicting transactions) could undermine transaction integrity.

  • Exit guarantees:
    Every VTXO is backed by a presigned unilateral exit path. This allows the user to enforce their claim onchain without cooperation from other parties.

  • Mitigation:
    Users are encouraged to regularly perform batch swaps to rotate VTXOs into confirmed batches, minimizing reliance on offchain assumptions.

Transaction Validity​

Ark Transactions are valid Bitcoin transactions under the UTXO model. Their validity is preserved by:

  • Use of deterministic scripts and signing logic
  • Enforcement of standard Bitcoin Script rules
  • Predefined exit paths embedded in each VTXO

Transactions are not broadcast unless necessary. However, should offchain coordination fail, users can trigger their presigned paths to settle on Bitcoin directly.

Summary​

Offchain execution in Ark offers significant efficiency gains while preserving the core security properties of Bitcoin. By enabling instant, coordinated value transfer and providing exit mechanisms, Ark allows users to transact securely without requiring immediate onchain settlement.

Users should remain aware of the trust boundary introduced during preconfirmation and consider batch swaps as a mechanism to restore full settlement finality.