Glossary

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A

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Arkade

A Bitcoin-native virtual execution layer that enables programmable money through offchain coordination while preserving Bitcoin’s security guarantees. Arkade virtualizes Bitcoin’s transaction layer to enable instant, parallel execution without requiring protocol changes.

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Arkade Operator

The coordinator of Arkade’s virtual execution environment who validates transactions, forwards requests to the Arkade Signer, and aggregates operations into onchain commitment transactions. Cannot unilaterally spend user VTXOs due to architectural constraints.

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Arkade Script

An enhanced version of Bitcoin Script that enables expressive and stateful transaction flows. Extends Bitcoin’s opcodes with additional primitives for introspection, arithmetic, logic, and asset operations, running exclusively in the preconfirmation state.

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Arkade Script Compiler

A development tool that translates high-level contract logic into executable Arkade Script code. Inspired by Bitcoin scripting languages like Ivy and CashScript, it verifies scripts preserve Ark constraints and unilateral exit guarantees.

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Arkade Signer

An independent entity that manages the cryptographic keys used for cosigning user transactions. Operates within a TEE and generates a single key that all Arkade addresses require for VTXO cosigning, isolated from operator control.

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Arkade Transaction

The standard transaction type within Arkade that extends the Ark Transaction model. Users submit signature requests to the operator, who cosigns upon validation, providing instant offchain preconfirmation while preserving unilateral exit guarantees for users.

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Ark Protocol

The foundational offchain protocol that Arkade builds upon, designed to address Bitcoin’s throughput limitations by aggregating users’ offchain interactions and settling them efficiently onchain through Batch Outputs as part of Commitment Transactions.

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B

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Batch Expiry

A timeout mechanism where Batch Outputs can be swept by the Arkade Operator after a predetermined period. Essential for operator liquidity management, as operators must front capital while users transition between VTXOs.

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Batch Output

A single Bitcoin output that consolidates multiple users’ ownership claims through a tree of presigned virtual transactions. Created through Commitment Transactions and locked to a Taproot address with specific spending conditions.

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Batch Settlement

The process of aggregating multiple Arkade Transactions into a single onchain Commitment Transaction, allowing many offchain operations to be compressed into one Bitcoin transaction output.

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Bitcoin Finality

The highest level of transaction security achieved when VTXOs are anchored to the Bitcoin blockchain through a Commitment Transaction, inheriting Bitcoin’s security guarantees.

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C

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Collaborative Path

One of two spending paths of a VTXO that requires both the owner’s signature and a cosignature from the Arkade Signer. This is the default path used for Arkade operations, enabling instant offchain transactions.

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Collateral Burn Mechanism

An economic security measure where the Arkade Operator locks Bitcoin collateral onchain. If the Signer double-signs conflicting transactions, such misbehaviour can be cryptographically proven and results in burning of the collateral.

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Commitment Transaction

The onchain Bitcoin transaction that finalizes Batch Outputs as settlements, serving as the anchor for users to enforce their offchain balances onchain using presigned transaction paths.

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Connector Bonds

A mechanism for sourcing external liquidity where lenders exchange BTC for connector outputs linked to spent VTXOs in a batch, providing temporary control over exit paths with interest-earning potential.

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D

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DAG (Directed Acyclic Graph)

The data structure used in Arkade’s Virtual Mempool where transactions form nodes that explicitly encode dependencies, enabling parallel execution of independent transaction branches.

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Dynamic Settlement

Arkade’s flexible finality model that allows users to transition between fast offchain execution (preconfirmed state) and stronger onchain security guarantees (Bitcoin finality) based on their needs.

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E

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End-to-End Encryption (E2EE)

A privacy mechanism ensuring communication between users and the Arkade Signer remains confidential and uncensorable, preventing the operator from intercepting or blocking specific transactions.

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Exit Path

One of two spending paths in a VTXO that allows the owner to spend funds unilaterally without operator cooperation, serving as a fail-safe option that guarantees user sovereignty over assets.

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F

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FROST

A threshold signature scheme that can be used to distribute signing authority across multiple entities, being researched for future implementations of distributed Arkade Signers.

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M

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Mass Exit

A risk scenario where large numbers of users simultaneously attempt to exit the system, potentially creating high costs due to elevated Bitcoin network fees and congestion in unilateral exit paths.

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MuSig2

A Bitcoin signature scheme used in Batch Outputs with an n-of-n internal key where all participants serve as cosigners, providing cryptographic security for the batch structure.

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P

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Parallel Execution

Arkade’s ability to process transactions simultaneously across independent VTXO branches without coordination overhead, enabled by the DAG structure of the Virtual Mempool and the UTXO-based architecture.

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Pay-to-Taproot (P2TR)

A Bitcoin address type that enables Ark to batch multiple offchain transactions into a single virtual transaction tree. P2TR allows for compact onchain footprint and privacy by embedding complex spending conditions that are only revealed when exercised.

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Preconfirmation

The instant transaction confirmation provided when the Arkade Signer cosigns a user’s transaction, enabling immediate execution within the Virtual Mempool.

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Programmable Money

Bitcoin that can follow predefined financial logic such as rules for spending or timing conditions, enabled by Arkade’s virtual execution layer. This functionality is achieved without changes to the Bitcoin protocol or reliance on custodial intermediaries.

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R

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Remote Attestation

A cryptographic verification mechanism that proves the Arkade Signer is running expected, tamper-free code within a TEE, providing transparency about the software’s integrity.

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T

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Taproot

A Bitcoin protocol upgrade that enhances efficiency, privacy, and flexibility by allowing complex spending conditions to be embedded in compact script trees. Arkade uses Taproot to construct Batch Outputs that consolidate many offchain transactions into a single, private virtual transaction tree.

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TEE (Trusted Execution Environment)

Hardware-backed secure enclaves (like Intel SGX) that provide isolated execution environments with cryptographic attestation capabilities, used to protect Arkade Signer keys and ensure verifiable execution.

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U

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Unilateral Exit

The ability for users to independently move their funds from Arkade to the Bitcoin blockchain at any time without requiring permission or cooperation from the Arkade Operator, enabled through presigned transaction paths.

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V

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Virtual Mempool

Arkade’s offchain execution engine that processes transactions in real-time without block time constraints, organizing them in a DAG structure that enables parallel execution and instant coordination.

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Virtual Transaction Output (VTXO)

The core unit of value in Arkade: a programmable, offchain object that mirrors a Bitcoin UTXO but exists in the Virtual Mempool. Each VTXO is backed by a presigned, unbroadcast Bitcoin transaction and includes defined ownership, value, and spending conditions, supporting both collaborative and unilateral exit paths.

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Virtual Transaction Tree

The hierarchical organization of virtual transactions that splits Batch Outputs into individual VTXOs at the leaves, enabling selective unrolling where users can exit without affecting other participants.

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Virtualization

The core approach of Arkade that abstracts Bitcoin’s UTXOs into a programmable execution layer, similar to how computing virtualization separated software from physical hardware constraints.

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VTXO Expiry

A lifecycle management mechanism where VTXOs require periodic user attention to avoid expiration, creating incentives for users to remain active and settle their preconfirmed positions appropriately.