At the most recent Bitcoin++ developers conference in Austin, Texas, Bitcoin Magazine’s Alex B. spoke with Michael van Bolts and Tiero van Ark laboratories to discuss the latest developments in Bitcoin’s technology ecosystem, with a particular focus on Lightning Network, Liquid and emerging technologies such as Ark.
The Journey and Challenges of Lightning
Reflecting on the journey of the Lightning Network, Michael shared insights on the challenges he faces, especially in high-fee environments. “The biggest blind spot that has become apparent recently is that in a high-fee environment, Lightning tends to hurt a lot,” he said. He elaborated on the issues that come with rate spikes and the need for better preparation and solutions, such as moving operations across chains via submarine swaps.
Tiero emphasized the underrated challenge of Lightning’s infrastructure. He pointed out the need for innovative designs that use Lightning to connect different layers, including Fedimint, Liquid and Ark, to improve the user experience. “Lightning will always be the way to connect all these new ideas,” Tiero said.
Liquid’s controversial role
Despite its relatively modest adoption compared to other technologies, both Michael and Tiero acknowledged that Liquid has proven to be a stable and reliable platform. “Liquid has been everywhere. It’s known and survived. It’s still around,” Michael said, noting the platform’s resilience and reliability over time. This stability is crucial for developers who want to build and experiment with new solutions without the risk of frequent disruptions.
Ark Labs’ Tiero elaborated on the benefits of sidechains like Liquid, highlighting their ability to reduce congestion on the Bitcoin mainchain. “Having a sidechain with clear tradeoffs can alleviate pressure on the main chain,” he said, highlighting that Liquid’s architecture offers clear benefits, including lower transaction costs and faster processing times. This can be particularly beneficial in high-cost environments, where moving operations off the main chain can lead to significant cost savings.
Michael also touched on the competitive landscape of new blockchain proposals, arguing that Liquid’s established track record provides a level of trust and predictability that newer solutions may lack. “In the grand scheme of the new proposals that are coming, I think Liquid is here to stay, at least for a while.”
Emerging standards and interoperability
Michael van Boltz discussed the fragmentation within the ecosystem and outlined the crucial role his company could play in providing liquidity across different chains and services. This ability to facilitate swaps between different Bitcoin layers, such as Lightning, the main chain, and Liquid, is crucial to maintaining a fluid and interconnected ecosystem. By offering these services, Boltz helps bridge the gap between different platforms, making it easier for users to move assets seamlessly.
Michael also emphasized the importance of maximizing competition between service providers to ensure users get the best market prices. “Ultimately, an open specification would make sense, but we are so early in this process,” he noted, emphasizing the need for experimentation before moving toward standardization. This experimentation phase allows for the identification of best practices, which can then inform the development of standardized protocols.
Ark Labs’ Tiero echoed Michael’s sentiments, adding that the diversity of user needs makes it challenging to establish universal standards at this stage. “Every company has its own user and sensitivity to its user.” He suggested that a larger, more diverse ecosystem would justify standardization efforts, but until then, companies need the flexibility to innovate and respond to their specific user base.
Both agreed that the current priority is to allow companies to experiment and innovate freely. “We can move so much faster if we can try things out ourselves and see where they go,” Michael said. This approach allows for rapid iteration and adaptation, fostering a more robust and resilient ecosystem in the long run.
Innovate with ARK
Tiero from Ark Labs gave an exciting glimpse into their latest project, Ark. “ARK is still in a post-ideation phase.” The focus, he explained, is on creating a protocol that seamlessly integrates with existing technologies like Lightning, ensuring it can effectively meet the needs of its users.
“We managed to show that it is feasible and works. And what I think will be the next step is to try to understand what are the real use cases for which the demand is huge,” Tiero noted. By focusing on practical applications and real user needs, ARK aims to create a robust, easy-to-use protocol that addresses current limitations in the ecosystem.
Experimentation is an important part of ARK’s development strategy. Tiero emphasized the importance of testing in flexible environments such as Liquid before finalizing detailed specifications. “Let’s just go where it’s super flexible and Liquid has introspective code at the max level so you can really do recursive covenants,” he explained. This approach allows the team to explore the full potential of the protocol and make necessary adjustments based on applications and real-world feedback.
Michael noted the uncertainties surrounding ARK’s future use cases and liquidity requirements. “It’s another thing like unknown unknowns. In theory, it’s interesting for service providers who have liquidity anyway,” he said, emphasizing the need for further exploration and development.
Optimism for Bitcoin’s Future
Concluding the discussion, both Tiero and Michael expressed a strong sense of optimism about the future of Bitcoin layers and covenant technology. Tiero was particularly optimistic about the progress made in covenant technology, seeing it as a transformative force for improving protocols such as ARK and Lightning. “I’m super, super optimistic after these two days, because for the first time all the people working with Covenant in production or in general really have a lot of knowledge on the subject.” He celebrated the opportunity for experts to come together to discuss and refine these ideas in a collaborative environment conducive to breakthrough innovation.
They also praised specific proposals, such as Rusty Russell’s restoration project, which aims to methodically improve Bitcoin’s scripting capabilities. “Rusty’s model actually gives us something to talk about, a frame of reference for what these covenants mean from a computational perspective and as you can, as I said, restore Bitcoin script to its former glory in a safe and sensible way,” said Michael.