Company Name: Ark Labs
Founders: Marco Argenteri and Simone Giacomelli
Establishment date: June 2024
Headquarters location: Europe
Number of employees: Six full time
Website: https://arklabs.to/
Public or private? private
Ten years ago, right out of high school, Marco Argenteri began his career in Bitcoin.
Some of his early work in the industry involved helping people make remittance payments using Bitcoin. Since those early days, Argentieri has viewed Bitcoin more as a currency than an investment, and has helped make it easier for others to use.
“I had a lot of people using Bitcoin because it was like Western Union without the KYC hurdles, and it was much cheaper at the time,” Argentieri told Bitcoin Magazine.
“They were not even interested in the Bitcoin price or volatility. They were just using it to send money abroad,” he added.
Fast forward to 2024, Argentieri is still focused on the same mission: helping people use Bitcoin cheaply, easily, and privately. Although these days he does it in a more sophisticated way through his company Ark Labsthrough which Argentieri and his team are developing the Bitcoin Layer 2 Ark.
What is a coffin?
Ark is an open source protocol created to help scale Bitcoin. The protocol enables users to amortize the cost of a single on-chain transaction across multiple off-chain swaps. These swaps happen on Ark’s servers, and are well-suited for Bitcoin users who already run Lightning nodes.
Ark Servers were created to address Lightning’s liquidity constraints by allowing users to receive funds off-chain in so-called vTXOs (virtual transaction outputs), alleviating the need to open a channel and/or receive incoming liquidity. The system runs off-chain on Ark servers, which also allows unilateral on-chain withdrawals.
Ark provides liquidity and sources for the transactions it facilitates via its servers (rather than relying on peers for liquidity the way Lightning does). Argentieri embraced Ark as a solution after recognizing Lightning’s shortcomings.
“Looking at an existing scaling solution like Lightning, the developers were idealistic in the sense that they were saying ‘Okay, people have to hold the keys, which is a very big, big step.’ Plus they’re also running the server plus they’ve also become very expert at liquidity management.” And so on,” Argentieri explained. “I think that was not a very realistic assumption of how people work.”
Argentieri founded Ark Labs with the reasoning that just as most people didn’t want to deal with using Bitcoin on their own for remittance payments 10 years ago, they don’t want to become experts at running Lightning nodes to make payments these days.
He explained: “Ark is trying to build on this assumption that there will be specialized people or specialized institutions who know how to handle liquidity, and this is what we call Arc servers.”
“Then you have like customers — people who just want to send or receive payments and use Bitcoin. They don’t really want to get into all the complexities,” he added.
“Ark starts with the assumption that not everyone is a peer, so there will be a liquidity provider on one side and a user on the other. We acknowledge that this is the natural way of things, even though we may not like it.”
Argentieri, a pragmatist, admits that although the central design of the ark may not be philosophically flawless, it is effective.
“The goal again was to have a protocol that starts working backwards from the user’s perspective rather than through an ideal scenario,” Argentieri explained.
“If you think from a user perspective, they really want to have a user experience that is similar to Bitcoin on-chain. With Bitcoin on-chain, you only have a key pair. Just generate a simple key, and you can receive it immediately,” he added, detailing how Ark’s work.
Bitcoin interest rate
UTXO holders can act as liquidity providers for Ark, which Argentieri sees as an opportunity, especially for those in the West.
“In the Western world, we know that people are really attached to this concept of return,” Argentieri said.
“Westerners can’t keep covers in cold storage and handle them well. They really feel like they’re missing something,” he added with a laugh.
To obtain liquidity for Ark’s servers as well as to quench Westerners’ thirst for yield, those interested can become Ark’s liquidity providers for a small fee.
“Ark actually serves as a way to present Bitcoin’s interest rate,” Argentieri theorized. “Ark could be a discovery mechanism for a true native interest rate for Bitcoin.”
Argentieri described how liquidity providers can share a small percentage of their Bitcoin holdings via what he calls a “warm wallet,” a wallet that enables users to keep the keys but that Ark can still access.
The return will come in the form of transaction fees via the VTXO model. While Argentieri said some may view this as “bitcoin financing,” he simply sees it as a win-win, a way to help scale while providing a small reward to those who provide liquidity to help do so.
Scaling horizontally
While a layer 2 solution like Lightning helps scale Bitcoin vertically, Ark helps scale Bitcoin horizontally, according to Argentieri.
“With Lightning, we set up one address and then two people can do an infinite number of transactions between each other — but that doesn’t scale,” he said.
With Ark, UTXO can provide liquidity for a large number of transactions compared to the amount of funds in UTXO. Argentieri gave the example that 100 BTC can provide liquidity for tens of thousands of virtual transactions.
Not only does Ark enable more transactions, it can also be used in many ways that Bitcoin itself can be used.
“People are very focused on Ark for payments, but the beauty of Ark is that you retain most of the UTXO capacity, which means you can do 95% of the things you can do in Bitcoin now on ARK,” Argentieri said. “You can do multi-signature and you can open multiple channels with one address.”
Argentieri also shared that using Ark is almost as unreliable as using Bitcoin, because even if Ark shuts down its servers, you can still get your subscriptions back on-chain.
“If for any reason a server disappears, gets censored, or goes offline, the entire virtual transaction tree stays on-chain,” Argentieri explained. This is what we call a unilateral exit.”
Ark’s future
Argentieri said Ark is working hard preparing for the fetch Leaf knot Marketing, an enterprise-level B2B offering that Argentieri describes as “an additional component to your LND node” that will help companies rebalance liquidity.
in Bitcoin Amsterdam Last month, Ark Labs announced a partnership with Boltz to enable off-chain Lightning liquidity management, with the goal of making swaps faster, cheaper, and easier via the Ark Node.
Other than that, it looks like Argentieri and the team at Ark Labs have a myriad of new developments in the works, though it will take the company some time to roll them out.
“I live inside the event, so I want to launch things every week, but engineering takes time, especially when you’re the first to do these things,” he said.
The plan for now is to stay on the mission, which is the latest state of the mission he started ten years ago.
“We can really get a tangible result within the Bitcoin ecosystem,” Argentieri concluded. “People will see bitcoin payments improve, and we hope we can be part of the reason why that happens.”