Ark is the third major Layer 2 protocol with some kind of one-way exit or enforcement mechanism in the base layer to get closer to the Bitcoin launch point. Lightning came first when C-Lightning went live in the Reckless campaign in 2018, Statechains in 2021 when the Mercury Wallet went live, and now the launch of Arkade’s Arkade wallet for clArk (the covenantless Ark) approaches the same goal line.
clArk has some shortcomings compared to the full implementation of Ark, which is the requirement for an untrusted version of every user within each Ark to co-sign large n-of-n multisig exit operations when they are created. If we had CTV or another similar agreement, users would not need to participate in the signing process, and the Ark Service Provider (ASP) could simply create an Ark using the agreement and users would be sure that they have full control of their funds guaranteed.
Ark presents an interesting exchange compared to the Lightning Network, both of which require participants to have excess funds to receive payments. However, in the case of lightning, it is a difficult game for individual users to figure out where to allocate their money and how to get money from others to send and receive. It is an individual problem that each user is left alone to solve. With Ark, any ASP can freely allocate some of its revenue to any of its users. They still need to solve the problem of finding it, but there is no longer a problem for each user to decide whether it is worth allocating money in that way, it can be done at the moment as any user needs it. of a common pot of money.
There is still a problem with Ark’s liquidity. For every floating charge on the unclosed Ark, the ASP must pay those charges so that users can access them on the new Ark. Fees have to start going up to handle that problem until they can recoup the money lost by shutting down Arks.
I think a way to deal with this high cost tail curve would be to explore some lessons from lightning, namely switchable topology. This can be incredibly easy compared to lightning. Lightning requires mapping and routing between established liquidity channels between individual user pairs, whereas with Ark it’s simply ASP to ASP.
A cash-strapped ASP may “pay” payments from its Arks to another ASP with additional funds available, establishing an ATLC connection between their Arks for payment from another ASP Ark to be received, saving user fees. Subsequently, as they are able to recover funds as they close existing Arks and their costs decrease, other ASPs that experience a financial shortfall may “return the favor” by returning payments to them.
This can create a kind of round robin and easily analyzed “I scratch your back, you scratch mine” among ASPs, which while leaving some money on the table during the high payouts, can create a predictable and affordable experience for them. users.
This comes with the risk that payments to all ASPs like these Arks link ASPs to all different ASPs, meaning that a non-cooperative closure would require the closure of Arks used by multiple organizations, but given that co-operative closures depend on user behavior I don’t think so this. it fundamentally changes the risk profile that ASPs do not intentionally create. This can be considered similar to the lightning channel overload problem.
There are some upsides, and possible downsides, but I think this is an idea worth exploring in terms of solving Ark’s liquidity crunch.
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