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What is ARK technology and how does it solve Bitcoin Lightning Network issues?

ARK technology is a second-layer protocol (Layer 2) on Bitcoin that enables cheap and fast off-chain transactions while maintaining self-custody, through shared UTXO participation via pre-signed transactions.
ARK operates without changes to current consensus rules, using Ark Service Provider (ASP) servers to coordinate rounds, where users sign "forfeit" transactions to ensure atomicity. This makes it a complement to the Lightning Network rather than a competitor, with a focus on privacy and low cost.

- How ARK works:
In ARK, users deposit Bitcoin into a 2-of-2 multisig address, generating Virtual UTXOs (vTXOs) off-chain within a pre-signed transaction tree.
During a "round" (round), users request updates, and the ASP creates a root transaction (root) that aggregates thousands of payments into a single on-chain transaction each block, supported by "connector outputs" for atomicity.
Funds can be withdrawn or paid outside rounds via chained transactions, with a Lightning gateway for compatibility.

- Main Lightning Network issues and ARK solutions:
- Channel liquidity management in Lightning: requires opening/closing channels and balancing internal/external liquidity (like flow from a client to a restaurant), causing high rebalancing fees.
ARK solution: shared UTXO participation in rounds, distributing costs across thousands of users with low fixed fees, no need for balancing.
- Complex setup and entry difficulty: Lightning requires pre-established channels and finality delays.
ARK solution: simple deposit to ASP generates immediate vTXOs, with easy payments and exits without individual channels.
- High closing or transaction fees: closing a channel pays full fees for one transaction.
ARK solution: a root transaction each block that aggregates everyone, with minimal individual cost (not affected by high chain fees).
- Weak privacy: clear linkages in Lightning due to channels.
ARK solution: off-chain transactions with omission (no on-chain data), better privacy with Lightning compatibility to enhance it.

In this way, ARK is more efficient and private, paving the way for global Bitcoin adoption with potential future improvements like covenants.
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