A Look At Our Newest Bitcoin Layer Twos

In my quest to find the best solution for Cake Wallet to offer user-friendly, non-custodial Lightning to our users, I’ve gone deep down the rabbit hole of both Spark and Ark. Both are quite novel approaches to Bitcoin layer two networks, and are designed at their core to be interoperable with the broader Bitcoin network for payments via the Lightning Network. While both can be used “just” for Lightning payments, both networks are positioned to rapidly expand and be used for far more than that over the coming months and years.

One thing to keep in mind is that while Spark and Ark on their face seem rather similar, in practice and in implementation they are quite distinct.

Why do we need new layer twos?

Bitcoin at its core is an incredible tool for freedom, but due to block size constraints, we know that the majority of the world will never be able to make transactions on-chain. Enter Lightning, a solution that allows one on-chain transaction to allow for essentially infinite off-chain transactions, expanding the usefulness of Bitcoin’s base layer and making it possible for more people to transact.

While Lightning provided a promising approach to scaling Bitcoin payments, ultimately the realization that its best role is as an interoperability layer and not as a tool for end-users to run themselves has become clear. On-chain requirements, liquidity management, liveness requirements, and other core hurdles make the implementation of user-friendly, self-custodial Lightning next to impossible. This has become apparent as most Lightning wallets and use-cases have opted to use custodial or federated models out of a need to simplify the user experience and the implementation difficulty.

The biggest win that Spark and Ark provide to the Bitcoin space out of the gate is providing a much simpler and easier way for the average developer to provide Lightning to their users, while allowing for greatly expanded functionality down the line beyond Lightning payments.

Ark, simplified

History

The concept of Ark was created in May of 2023 by Burak, a Lightning advocate and developer. The driving force behind its creation was the realization that the Lightning network as constructed was not effective as an onboarding tool for the average individual due to inbound liquidity requirements among many other things, and that privacy was often lacking. While Burak invented the protocol itself, two companies – Ark Labs and Second – have stepped in to build the Ark protocol into an end-to-end layer-two network for Bitcoin.

While both companies are building around the same open-source Ark protocol, their implementations and objectives are rather dissimilar. As a result, I’ll do my best to distill both below where possible.

Terminology

Ark: Ark is a protocol for moving Bitcoin transactions off-chain by leveraging multisig and pre-signed transactions between users and the Ark Operator. Anything you can do on Bitcoin, you can do on Ark but faster and with lower…