On Tuesday, Ark Labs announced the public beta launch of the highly anticipated (at least among Bitcoin purists) Arkade, which is a new upper-layer network protocol built on top of the base Bitcoin blockchain that enables more user-friendly payments and extended financial use cases, while still retaining much of the underlying Bitcoin blockchain’s properties. The protocol is viewed by many as the most important Bitcoin protocol rollout since the Lightning Network back in 2018.
The basic idea with Arkade is to mix the benefits of the Bitcoin network’s inherently decentralized and non-custodial nature with the ease of use and speed that come in more traditional, centralized fintech systems. While many viewed the Lightning Network as the long-term solution for Bitcoin payments at the conclusion of Bitcoin’s block size war, that second-layer payments protocol has had some issues in terms of direct, non-custodial user adoption.
Arkade, originally known as Ark, was initially created in an attempt to solve many of those perceived issues with Bitcoin’s Lightning Network. However, Arkade has also been extended over the past year or so to enable much of the decentralized finance (DeFi) functionality that has been increasingly found on alternative cryptocurrency networks, such as Ethereum and Solana, over the past few years.
Early Bitcoin ecosystem partners building on Arkade include exchanges Swan and Bull Bitcoin, in addition to open source wallet and payment processing apps such as Breez and BTCPayServer. Ark Labs also built Arkade Wallet as a reference implementation of how this new protocol can be used.
Fixing Bitcoin Payments
While the Bitcoin network was originally launched as a peer-to-peer digital cash system, the base blockchain layer of the network has mostly been used as digital gold (a global, apolitical store of value) rather than a payments system up to this point. While there are some niche use cases where Bitcoin’s censorship-resistant payments make perfect sense, such as its role in the development of darknet markets like Silk Road, the reality is bitcoin-denominated payments can still be difficult for the average person to handle, especially when there is an intention to retain the sorts of properties that make the technology interesting and different from traditional, centralized systems in the first place.
That said, the Lightning Network has already gained some traction as a payments layer for Bitcoin that retains much of the base layer’s decentralization. Perhaps most notably, it is heavily integrated into Nostr, which is an alternative, decentralized social media protocol supported by people like Twitter co-founder Jack Dorsey and NSA whistleblower Edward Snowden. However, some of the usability issues with the Lightning Network have often led to it being adopted in a rather centralized manner, where third-party custodians are still involved.
“Ark balances are fully self-custodial.” Not necessarily. It's easy to be in a situation where you can't afford the fees to go on chain. Yet the ASP can afford the fees to steal your money (and everyone elses'). I would hesitate to count that as non-custodial. — Peter Todd (@peterktodd) July 2, 2025
Arkade offers a new, third option other than the base blockchain and the Lightning Network that introduces a new set of tradeoffs that is intended to be the perfect mixture of the benefits of Bitcoin’s decentralization with the usability of more centralized payment networks. To be clear, Arkade is not fully without trust, as there are some situations where the security and trust models can break down.
The upper-layer Bitcoin protocol introduces the concept of Ark Service Providers (ASPs) who are indeed centralized but do not have full custody of their users’ funds, as users can publish a cryptographic proof to the base Bitcoin blockchain in situations where their ASP tries to cheat them out of their money.
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