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Arkade’s architecture introduces two distinct levels of transaction confirmation, a preconfirmation state and full Bitcoin finality. Both states come with different security properties:

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Preconfirmation

All offchain VTXOs in the virtual mempool operate under the preconfirmation trust model. Preconfirmation indicates that the Arkade Signer has processed and co-signed the transaction, enabling the VTXO owner to use the resulting outputs for subsequent transactions. This mechanism allows for rapid and cost-effective execution within the offchain execution environment. However, preconfirmations rely on the operator’s integrity. A malicious operator could double-sign conflicting transactions, creating competing VTXO ownership chains that undermine a user’s unilateral control over their assets. Any misbehavior can be cryptographically proven, while economic incentives and verifiable execution ensure reliable operation.

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Bitcoin Finality

Transaction finality in Arkade is achieved when users anchor their preconfirmed VTXOs to the Bitcoin blockchain via a batch swap. Batch swaps function like atomic swaps, enabling users to safely transfer their preconfirmed VTXOs to the operator in exchange for new VTXOs secured by an onchain Bitcoin transaction (ie. commitment transaction.
Users are encouraged to periodically settle their offchain transactions onchain through batch swaps to fully secure their holdings.
Settled VTXOs, while structurally identical to preconfirmed ones, are solely traceable back to batch output transactions, ensuring full Bitcoin-level immutability and censorship resistance.

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Dynamic Settlement

Arkade enables users to seamlessly shift between preconfirmation and Bitcoin finality, balancing security against convenience by choosing when to settle.
Arkade allows users to dynamically transition between preconfirmation and Bitcoin finality. This flexibility enables participants to operate in the fast, low-cost offchain environment when convenience and speed are paramount, and to anchor their state to Bitcoin via participating in a batch settlement, when stronger guarantees of immutability and censorship resistance are required. Users can choose the optimal point to settle, striking a balance between efficiency and security based on their needs.
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