Ark explainer

View full length version

Transactions

Note: In an optimistic scenario, transactions marked with a * should never hit onchain

Funding transaction

• When Alice wants to enter the Ark

Inputs	Outputs (locking script)
Alice’s segwit UTXO	(Alice + ASP) or (ASP in 1 month)

Redeem transaction *

• Insurance for Alice, in case the ASP stops responding
• Allows Alice to receive funds back from the Ark

Inputs	Outputs
Funding transaction spending Alice + ASP	(Alice + ASP) or (Alice in 24 hours)

Forfeit transaction *

• Insurance for the ASP, in case Alice tries to double spend her VTXO after spending it inside Ark
• Before the ASP funds Bob’s VTXO in the next Pool transaction, he must receive this transaction signed by Alice
• Uses a connector from the next Pool transaction to achieve atomicity

Inputs	Outputs
Redeem transaction spending Alice + ASP	ASP
Connector from next Pool transaction

Pool transaction (aka Ark transaction)

• Funded by the ASP, creates VTXOs
• After 4 weeks, the ASP can get their funds back
• Multisig n-of-n where n is the number of participants
• A new transaction is broadcasted every 5 seconds

Inputs	Outputs
ASP UTXO	Shared output: n-of-n or (ASP in 1 month)

Shared output (aka Shared UTXO)

• Represents a binary tree of transactions
• In an optimistic scenario, this tree is never revealed

VTXO *

• Similar to Redeem transaction
• Can be broadcasted anytime, on the condition that previous transactions on the transaction tree (up to the Pool transaction) are confirmed or broadcasted at the same time

Inputs	Outputs
Previous transaction on the binary tree	(Alice + ASP) or (Alice in 24 hours)

Timeline

Boarding the Ark

1. Alice creates a Funding transaction:
   • adds any segwit output as an input (must be segwit)
   • adds output locked by (Alice + ASP) or (ASP in 1 month)
   • sends it to ASP, not signed
2. Alice receives a Redeem transaction from the ASP:
   • signed by the ASP, spends Funding transaction (1) via Alice + ASP
   • has one output locked by (Alice + ASP) or (Alice in 24 hours)
3. Alice signs and broadcasts Funding transaction (1)
   • Is now safe for Alice to broadcast this funding transaction because now she can leave anytime with Redeem transaction (2) spending Alice in 24h, i.e. Alice will be able to get her funds back in 24 hours.
4. ASP (with Alice) prepares next Pool transaction
5. Alice creates a Forfeit transaction:
   • spends from Redeem transaction (2) via Alice + ASP
   • adds connector output from Pool transaction (4) as input
   • signs (SIGHASH_ALL) and sends it to the ASP
6. ASP broadcasts Pool transaction (4)
7. Alice has now a VTXO
8. After 1 month ASP spends Funding transaction (1) via ASP in 1 month

Payment to Bob

1. Alice tells ASP to send VTXO to Bob
2. ASP (with Alice) prepares next Pool transaction
3. Alice creates a Forfeit transaction:
   • spends from VTXO (1) via Alice + ASP
   • adds connector output from Pool transaction (2) as input
   • signs (SIGHASH_ALL) and sends it to the ASP
4. ASP broadcasts Pool transaction
5. Bob has now a new VTXO
6. For at most 4 weeks, Alice will be able to double spend her’s VTXO, but if she does it, the ASP will have time to grab the funds from the VTXO to itself using the Forfeit transaction

Exiting the Ark

1. Alice tells ASP she wants to trade VTXO for UTXO
2. ASP (with Alice) prepares next Pool transaction:
   • an additional output is added, locked by Alice in 24 hours
3. Alice creates a Forfeit transaction:
   • spends from VTXO (1) with Alice + ASP
   • adds connector output from Pool transaction (2) as input
   • signs it and send it to the ASP
4. ASP broadcasts Pool transaction
5. Alice has now a new UTXO, spendable in 24 hours
6. For at most 4 weeks, Alice will be able to double spend her’s VTXO, but if she does it, the ASP will have time (24 hours) to grab the funds from the VTXO to itself using the Forfeit transaction