Nearly seven years after the Lightning Network brought faster payments to Bitcoin, new technology is poised to take the world’s most powerful digital asset to the next level.
Ark Labs has launched the public beta of Arkade, a long-awaited layer 2 protocol built directly on top of Bitcoin.
This project will make Bitcoin faster, more programmable, and capable of supporting complex financial tools such as lending, trading, and even stablecoins, without changing Bitcoin’s core or sacrificing its security.
Bitcoin is the world’s most secure blockchain, with a hash rate comparable to other networks, but it was not built for programmable finance.
Its base layer prioritizes security and decentralization, restricting developers from building decentralized applications like those found on Ethereum and other networks. Ark Labs wants to change that.
“Today’s release marks the beginning of Bitcoin’s evolution as a programmable currency.” Marco Argentieri, CEO of Ark Labs, said: “Bitcoin L2 situation is promising, but shipping will not be easy.”
Arkade is the result of two years of continuous development based on the Ark protocol, which was first proposed in 2023. Backed by investors including Draper Associates, Axiom, and Fulgur Ventures, Ark Labs calls this the biggest upgrade to Bitcoin infrastructure since the Lightning Network.
Arkade’s innovation is a new concept called Virtual Transaction Output (VTXO). These are the off-chain representation of Bitcoin’s standard unspent transaction outputs (UTXOs), the mechanism that records who owns what on the blockchain.
VTXO allows users to instantly send, lend, or trade Bitcoin while maintaining the same level of security as on-chain transactions.
Instead of changing Bitcoin’s consensus rules or creating sidechains, Arkade “virtualizes” Bitcoin’s transaction layer.
Off-chain transactions are coordinated by Ark Service Providers (ASPs), which are similar to Lightning Network nodes and collectively settle thousands of transactions on Bitcoin’s main blockchain at regular intervals. This reduces fees and congestion while giving users complete control over their funds.
ASP does not store any user assets. Every VTXO is associated with a pre-signed Bitcoin transaction, ensuring users can retrieve their funds on-chain at any time. If an ASP goes offline or misbehaves, users can safely exit and return to the Bitcoin network.
“Arkade unlocks the full potential of Bitcoin without compromising its value.” Argentieri said. “Virtualizing Bitcoin’s transaction layer allows developers to build directly on top of Bitcoin, rather than building around it.”
One of Arkade’s standout features is Arkade Assets. Arkade Assets is a framework that enables the use of stablecoins and other tokens within the Bitcoin ecosystem. This means that assets like Tether (USDT) could quickly revert back to Bitcoin, something that hasn’t been possible since Tether’s initial experiments over a decade ago.
“Tether pioneered a stablecoin on top of Bitcoin over a decade ago, but the ecosystem lacked the infrastructure to support the sophisticated applications demanded by users.” Argentieri said.
“Arkade finally provides that foundation. We are building the rails to return stablecoins to what they were meant to be: the world’s most secure blockchain.”
With $200 billion worth of stablecoins in circulation across the digital asset market, Ark Labs believes there is a huge opportunity to shift some of that activity back into Bitcoin.
The team believes that combining the security of Bitcoin with the flexibility of Arkade will enable developers to build financial applications ranging from smart wallets and lending platforms to decentralized trading systems without relying on custodial bridges, alternative blockchains, or wrapped assets.
Arkade started as a replacement for the Lightning Network, but has evolved into a complement. Both systems extend Bitcoin using off-chain transactions, but Arkade’s virtualization model supports more complex use cases.
Through integrations like Voltz, users can seamlessly move liquidity between Arkade and Lightning.
“We realized we weren’t just building another payment rail.” Alex Bergeron, Director of Ecosystems at Ark Labs, said: “Arkade supports lending protocols, trading platforms, and smart wallets directly on top of Bitcoin, applications that were previously not possible without wrapped tokens and custodial compromise.”
The launch of Arkade’s mainnet beta is an important milestone for the Bitcoin ecosystem, which has long faced challenges in competing with the programmable features of Ethereum and other blockchains.
Its proponents argue that the launch could spark a new wave of Bitcoin-native decentralized finance (DeFi) tools.
Arkade’s launch partners include Breez, BTCPay Server, BullBitcoin, BlueWallet, Boltz, and Lendasat, demonstrating strong industry interest. Developers already have access to software development kits (SDKs) for TypeScript, Golang, and Rust to start building applications on Arkade.