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Arkade transforms Bitcoin into a programmable execution environment through a client–server architecture. Developers can build lending protocols, intelligent wallets, decentralized exchanges, and sophisticated financial applications, while users retain sovereignty over funds. Arkade is available on Bitcoin today. It requires no changes to consensus rules and no network upgrades.

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Client-Server Model

Batch Outputs
Arkade implements a client-server architecture where users and applications cooperate through an operator to access a programmable Bitcoin environment. Clients submit transactions while the operator handles execution, validation, and eventual Bitcoin settlement. This approach goes beyond simple payment relay; it offers a complete virtualization of the Bitcoin stack. Participants can process advanced logic, enforce programmable conditions, and coordinate sophisticated multi-party operations, at scale. Bitcoin acts as the settlement layer for these interactions, anchoring virtual execution to the world’s most secure monetary network. The designated Arkade operator performs several critical functions:
  • Creates and manages batch outputs through onchain Bitcoin transactions
  • Facilitates offchain transactions between users by cosigning transfers
  • Provides liquidity for commitment transactions (onchain settlements that finalise each batch)
The operator’s role is designed with strict boundaries that ensure users always maintain control over their funds.

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Virtual UTXOs Enable Scale

Building upon Ark protocol foundations, Arkade mirrors Bitcoin’s familiar UTXO structure using Virtual Transaction Outputs (VTXOs). These offchain abstractions preserve a familiar output ownership model while embedding many claims into a single onchain batch output. Batch outputs partition a single transaction output (UTXO) into multiple Virtual Transaction Outputs (VTXOs). Each VTXO can be independently spent or claimed by its owner without affecting others, backed by presigned Bitcoin transactions that enable unilateral onchain redemption.
Batch Outputs
Onchain batch outputs use an n-of-n multisignature arrangement involving all associated VTXO owners and the Arkade operator. During batch creation, participants generate presigned transactions that specify both collaborative and unilateral spend paths.
Spending conditions
Collaborative spending requires signatures from both the VTXO owner and operator, while unilateral spending allows users to withdraw independently after a predefined delay.

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Virtualized Transaction Processing

Arkade creates an abstraction layer of Bitcoin’s base protocol. Transaction logic executes instantly within a virtual processing environment called the Virtual Mempool. This approach eliminates blockchain confirmation delays while preserving layer-one security properties.
Light mode interface
The Virtual Mempool organizes transactions as a directed acyclic graph (DAG) rather than Bitcoin’s linear confirmation queue. This structure explicitly encodes transaction dependencies, enabling independent transaction branches to execute in parallel without coordination overhead or global state bottlenecks.

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Dynamic Settlement Architecture

Arkade gives clients complete control over transaction finality. Offchain preconfirmations enable instant transaction processing within the Virtual Mempool. Clients then decide if and when to anchor these preconfirmed transactions to Bitcoin via batch settlement. This flexibility allows clients to optimize their preferred tradeoffs between execution speed, settlement costs, and security requirements.

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Preconfirmations

When the Arkade Operator cosigns a transaction, it receives a preconfirmation that makes the resulting VTXOs immediately spendable for subsequent offchain transactions. This enables rapid transaction chains within the Virtual Mempool without Bitcoin block confirmations. Trust Model: Preconfirmations require trusting the operator not to sign conflicting transactions that could create competing VTXO claims, potentially undermining unilateral exit guarantees until onchain settlement resolves any disputes.

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Bitcoin Finality

Users achieve full Bitcoin security by anchoring their VTXOs onchain through batch settlement. This atomic process exchanges preconfirmed VTXOs for new VTXOs secured by Bitcoin consensus through Commitment Transactions. Trust Model: Once settled onchain, VTXOs inherit Bitcoin’s complete security guarantees: immutability, irreversibility, and censorship resistance.

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Batch Settlement Process

Spending conditions
When clients opt for Bitcoin finality, the server coordinates settlement through batch swaps:
  1. Clients signal their intent to participate in a batch swap, offering their preconfirmed VTXOs
  2. Server validates requests and organizes participants into a new batch structure
  3. Clients atomically exchange their preconfirmed VTXOs for newly created VTXOs within a hierarchical transaction tree
  4. The entire swap compresses into a single Bitcoin Commitment Transaction, with all new VTXOs secured by the resulting batch output
Spending conditions
This compression delivers extraordinary cost efficiency: thousands of client operations consolidate into a single blockchain entry, sharing settlement fees across participants.

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User Journey

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Boarding

Users acquire VTXOs by sending Bitcoin to specialized boarding addresses. The operator converts the associated UTXOs to VTXOs within a batch output. Users can also receive VTXOs directly from existing participants.

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Offchain Activity

Users transact within the Virtual Mempool, transfer value, use smart contracts, and access financial applications. All operations use parallel execution while maintaining Bitcoin’s UTXO model.

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Settlement

Users control their security level through two options. Preconfirmations provide instant execution with operator trust. Batch swaps provide Bitcoin-level security by exchanging VTXOs for ones secured by onchain commitment transactions.

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Exit

Users have two exit methods. Unilateral exit lets them broadcast presigned transactions without operator cooperation. Collaborative exit allows the operator to include UTXO outputs in new transactions for simpler withdrawal.

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Lifecycle Management

VTXOs incorporate expiration mechanisms for capital efficiency. Prior to expiration, clients must migrate VTXOs into fresh batches using batch swaps. While introducing a liveness requirement, this design optimizes system liquidity and ensures the operator can recycle capital efficiently. Contemporary wallet software handles client lifecycle management via:
  • Automated background renewal
  • Secure third-party delegation services for hands-off management
  • Alert systems for manual oversight when clients prefer direct control
Post-expiration, the server reclaims inactive capital, reallocating resources to new batch outputs.