Bitcoin scaling proposal Ark is getting closer to reality. After a year of research focused on refining the reference implementation, Ark Labs announced today the completion of a $2.5 million pre-seed funding round led by Tim Draper and his firm, Draper Associates. While the technical feasibility of Ark’s approach was initially debated, today’s announcement is a strong show of confidence for the future of the protocol and the builders behind it.
Speaking with Bitcoin Magazine, Ark Labs’ co-founder Marco Argentieri expressed excitement about the road ahead, suggesting Ark is ready to provide a significant lift to existing scaling efforts.
“This funding will accelerate our efforts to make Bitcoin transactions as simple and user-friendly as possible, making fast, low-cost user-friendly transactions powered by Bitcoin a reality for potentially billions worldwide.”
Initially conceived as an alternative to the Lightning Network, Argentieri emphasizes that his company’s immediate focus is on supporting the adoption of Bitcoin's popular Layer 2 solution.
"Lightning has made tremendous strides recently,” he said. We believe we can leverage this network effect to bring Ark to market and enhance the self-custodial experience for existing Lightning users."
Ark addresses these challenges by utilizing trustless servers, allowing Lightning users to mitigate the difficulties typically encountered with operating Lightning infrastructure. A recent trend in reducing the costs of on-chain operations related to liquidity management has been to rely on custodial or federated options such as the Liquid sidechain.
"Unfortunately, this approach introduces custodial trade-offs that conflict with Bitcoin's original vision. Ark has the potential to overcome these challenges at scale without compromising trust,” says Argentieri.
Asked about his motivation behind the investment, lead investor Tim Draper echoed the sentiment:
"Soon many people around the world will live on the Bitcoin standard. Today, we have to focus not only on how to buy and store Bitcoin but how to use it as a medium of exchange for everyday purposes. Ark's architecture allows for seamless Bitcoin payments, in a way that stays true to its core principles of decentralization and self-custody"
One of Ark Labs' early challenges was to transform the Ark protocol from a raw concept into a fully realized solution. According to Argentieri, the initial documentation and parameters proposed by its creator were not fully fleshed out and sometimes hindered a broader understanding of the technology.
"Many of the concepts lacked full development, and the arbitrary numbers being discussed failed to capture the protocol's flexibility, particularly in addressing liquidity issues," he explained.
Perhaps the most notable confusion has been around the need for covenants. Bitcoin covenants are smart contract restrictions that limit how and where future transactions can be spent, enhancing security and control over funds. While covenants can significantly contribute to the user experience around Ark as well as potentially improve capital efficiency, Argentieri insists that a good number of use cases can already benefit from a “covenant-less” version:
“Different types of users can leverage Ark’s features. While mobile clients are more challenging right now, using pre-signed transactions is a viable alternative to covenants for online servers.”
He also believes his company is well-positioned to deliver the first production service that can validate the potential of the technology. “When Ark is operational with actual capital deployed and large numbers of users benefitting from the infrastructure, it should help make a strong case for covenants”.
The team recently released an alpha version of the covenant-less implementation, now available on GitHub. Soon to follow will be the Ark Node, an Ark-enabled wallet, allowing users to send, receive, and swap Bitcoin over the Lightning Network, all within a user-friendly dashboard. Interested users should sign up on the website to receive updates for the closed beta testing in early September, with a broader rollout expected later this year.
Joining this funding round are Bitcoin-focused funds Axiom and Fulgur Ventures, along with prominent angel investor Stephen Cole. Allen Farrington, general partner at Axiom, shared his enthusiasm for the project: "We are excited to support what appears to be a substantial breakthrough in broadening Bitcoin's utility as a means of payment and bringing increased sophistication to the financial infrastructure of the network."
Ark Labs invites developers, top talent, and potential partners to contribute to its efforts.