Ark Labs launches to develop new Bitcoin Layer 2 payments network

Ark Labs launched on Tuesday, creating a company dedicated to developing a new Bitcoin Layer 2 payments network based on the Ark protocol.

Ark Labs argues that while the Lightning Network — a second-layer solution of payment channels built on top of the Bitcoin blockchain — has helped deliver faster, low-cost payments, the need to manage channels and liquidity has driven many users toward custodial Lightning wallets, trading control over their funds for convenience.

The Ark protocol, originally proposed in 2023, represents a Bitcoin Layer 2 scaling solution that works alongside the Lighting Network, aiming to deliver a more simplified user experience while retaining self-custody.

“If covenants were activated on the Bitcoin network, it could offer lots of nice optimisations for Ark users. But there’s no need to wait — Ark is already possible on Bitcoin today,” Ark Labs CEO Marco Argentieri said in a statement shared with The Block. “With the launch of Ark Labs, we're finally making Ark a reality, so that users can start enjoying the benefits of seamless, scalable transactions right away.”

How the Ark protocol works

Unlike the Lightning Network, users don’t need to manage payment channels or inbound/outbound liquidity to make payments. Users also don’t need to set up their own nodes, only requiring a light wallet on a smartphone to start sending and receiving self-custodial Ark payments, according to the team.

Ark is made up of a network of Ark Service Providers (ASPs) that users can connect to via Ark-compatible wallets. An ASP is a trustless server that issues “virtual transactions” to a user upon deposit, which can then be transferred at low cost between users of the same ASP, sent to users of different ASPs over Lightning or redeemed on-chain at any time, the team said.

“By ensuring users can redeem on-chain, they can be confident they are in full control of their funds, even if their ASP goes offline,” they added. ASPs can collect transaction fees from users making payments inside the Ark layer.

Ark Labs is funded with a grant from bitcoin-native financial services firm Vulpem Ventures and led by a team of seasoned Bitcoin developers. Ark Labs will lead the maintenance of an open-source implementation of the Ark protocol, now available for anyone to build an ASP or Ark-enabled wallet.

Ark Labs said it already has several commercial services in development leveraging the protocol, with the first application expected to launch later this year.

“It's becoming clear that Bitcoin needs more alternatives for scaling. We always keep an eye on upcoming tech that can enhance our Bitcoin services, and Ark is at the top of our list,” Swan Bitcoin CEO and Ark Labs advisor Cory Klippsten said. “We're looking forward to finding ways of integrating it to deliver more options for efficient deposits, withdrawals, and payments.”

Transactions on the Bitcoin network at all-time highs

Ark Labs’ launch comes at a time when the seven-day moving average of daily transactions on the Bitcoin network is near all-time highs of 720,000, boosted by the success of Ordinals and Runes. However, increased transaction volume can lead to congestion delays and higher fees, demonstrating the need for more scalable payment solutions on Bitcoin.

The Lightning Network carries some of that burden but is currently limited to a capacity of 5,100 BTC ($350 million), according to The Block’s data dashboard .