Security & Trust Model

Arkade’s security rests on one guarantee: a user can claim their funds onchain without the operator. The other mechanisms on this page limit what the operator can do in normal operation.

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The Trust Model

In normal operation, users spend through the collaborative path, which the operator cosigns. The operator cannot spend a user’s virtual outputs without the user’s signature. A preconfirmed output relies on the operator not cosigning a conflicting transaction; a settled output does not. If the operator is unavailable, censors, or misbehaves, users fall back to the exit path, which needs no operator.

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Unilateral Exit

Every virtual output comes with presigned Bitcoin transactions that the user can broadcast without anyone’s cooperation. This is the self-custody guarantee. It is the emergency path if the operator is unavailable; in normal operation, users leave Arkade by offboarding.

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How Unilateral Exit Works

Virtual outputs sit in a virtual transaction tree rooted in a batch output. To exit, a user:

1. Broadcasts the transactions on their branch of the tree, from the batch output down to their virtual output. For example: batch output → virtual transaction A → virtual transaction B → the user’s virtual output.
2. Waits for the exit delay of the virtual output’s exit path.
3. Spends the output with the exit path, to an onchain address.

Each transaction must confirm on Bitcoin, and the user pays its network fee. Other users’ virtual outputs in the same batch stay valid. Exit before the batch expires: after that, the operator can sweep the batch output.

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Exit Costs

Each transaction on the path costs Bitcoin network fees. The deeper a virtual output sits in the tree, the more transactions an exit needs:

• Direct child of the batch output: 1 Bitcoin transaction
• Second level: 2 Bitcoin transactions
• Third level: 3 Bitcoin transactions

The final spend through the exit path adds one more. Offchain transaction chains push virtual outputs deeper. When fees are high, an exit can cost more than a small virtual output holds. Settle periodically to keep exit paths short.

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Security Stack

Three mechanisms constrain the operator and protect users.

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Risks and Limitations

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Mass exit scenarios

A mass exit happens when many users exit at the same time, for example after an operator failure. Users keep control of their virtual outputs through the presigned exit paths. But if Bitcoin fees are high at that time, exits can cost more than small virtual outputs hold, and longer transaction chains need more onchain transactions.

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Signer compromise

If an attacker gets the Arkade Signer’s key, through a software vulnerability or an infrastructure attack, the attacker can sign conflicting spends of the same virtual outputs. Remote attestation failures and conflicting signatures reveal the compromise. The operator is expected to halt the system. Users should stop creating new virtual outputs and prepare to exit. Key compromise is the most critical failure mode. Operator downtime affects only availability, but a compromised key enables double signing. The TEE’s hardware isolation makes this hard.

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