Dikshant
Dikshant Summer of Bitcoin Batch of 2025, worked on Ark

How to Start Contributing to Ark Labs: Building a Zero-Collateral Lottery on Bitcoin

This post is for anyone who wants to dive into Bitcoin layer-2 development, contribute to protocol-level systems, and understand how smart contracts can exist on Bitcoin without forks or bridges.
It’s also my journey from knowing almost nothing about Bitcoin scripting to designing a trust-minimized, zero-collateral lottery on Ark.


My Experience: From Zero to Protocol Contributor

I was selected for Summer of Bitcoin to work with Ark Labs, the team behind the Ark Protocol a novel layer-2 for Bitcoin that enables fast, low-cost, self-custodial transactions.

My task? Design and implement a zero-collateral lottery system on Ark a provably fair, decentralized game where players don’t need to lock up extra funds to participate.

Coming in, I had minimal Bitcoin knowledge. I didn’t understand Taproot, or even how Lightning worked. I treated them as black boxes.

But that’s the beauty of Summer of Bitcoin: it’s not about what you know, it’s about what you’re willing to learn.

Over the summer, I went from reading Bitcoin Core docs to implementing multi-party commitment schemes, Taproot spending trees, and offchain coordination protocols all while building a production-ready SDK: arkive-sdk.

This post is my getting-started guide for future contributors not just to Ark, but to Bitcoin systems programming.


Getting Started with Ark: Know Your Foundations

Ark is not a replacement for Lightning as Marco says, it’s a complement. It’s designed for self-custodial, offchain execution with onchain finality, using Bitcoin’s UTXO model in a novel way.

But to contribute meaningfully, you need a solid grasp of:

Bitcoin Fundamentals

  • UTXO model and transaction structure
  • Scripting: OP_CHECKSIG, OP_CSV, OP_HASH256
  • Sighash modes (SIGHASH_ALL, SIGHASH_SINGLE, etc.)
  • SegWit and Taproot — especially key-path vs. script-path spends
  • MuSig2 for efficient multisignatures

Without this, Ark’s design will feel like magic. With it, you’ll see the elegance.

Helpful, But Not Required

  • Lightning Network: Understand channel mechanics, HTLCs, and routing
  • State channels and commitment transactions
  • Cryptographic commitments (hash-based, Schnorr-based)

You don’t need to be an expert but you must be willing to learn.


The Challenges: Ark Isn’t Perfect (And That’s Okay)

Ark is powerful, but it’s not without trade-offs. Here are the big ones:

1. Liquidity Burden on the Server

Unlike Lightning, where liquidity is shared between peers, Ark Service Providers (ASPs) must front all the liquidity for the batch.

If users deposit 10 BTC, the ASP must lock up at least x4 times the liquidity that lightning would require and more if there are preconfirmed VTXOs.

This makes ASPs capital-intensive, but it enables instant, trustless coordination.

2. Mempool Pressure at Scale

Ark batches transactions every few seconds (e.g., 5s) and submits a Commitment Transaction to Bitcoin.

While this is efficient per user, at scale, if many ASPs batch frequently, they could saturate the mempool.

Possible solutions?

  • Inter-ASP coinjoin: All ASPs batch together into a single onchain transaction
  • Dynamic batch timing: Adjust batch intervals based on network load
  • Fee-aware batching: Delay non-critical batches during congestion

This is an open research problem and a great area for future contributors.

3. DoS Resistance is Limited

Ark isn’t fully DoS-resistant. A malicious server could:

  • Censor transactions
  • Delay batch swaps
  • Fail to co-sign

But users can always unilaterally exit though this costs onchain fees.

So the threat model is: The server can grief, but not steal.

And that’s a good trade-off for usability.


My Work: Building a Zero-Collateral Lottery

My project was to build a zero-collateral lottery, inspired by the Miller & Bentov paper, but adapted to Ark’s offchain model.

The Core Idea

  • Players commit to a random value (via hash)
  • After all commit, they reveal their secrets
  • Winner is determined deterministically from the combined randomness
  • Winner receives the entire pot, losers’ funds are forfeited

No collateral. No trusted third party. Just cryptography.

The Architecture

I designed a system where:

  1. Each player funds a VTXO into the lottery
  2. They pre-sign a forfeit transaction that says:
    “If I lose, my VTXO goes to the winner”
  3. When the winner is determined, the server co-signs the forfeit transactions from losers
  4. A batch swap settles the payout to the winner’s new VTXO

The key insight?

The forfeit transaction is the smart contract.
The batch swap is the settlement layer.

This is Bitcoin-native programmability no EVM, no bridges.

The SDK: arkive-sdk

I built arkive-sdk — a Rust-based SDK that includes:

  • Wallet management with backup & sync
  • VTXO lifecycle tracking
  • Zero-collateral lottery with escrow scripts
  • CLI for testing and demo

It’s designed to be production-ready, with proper error handling, storage, and security.

For more deatils refer my talk: Zero-Collateral Lottery on Ark: A Bitcoin Smart Contract Using Forfeit Trees

Impact & Benefits of My Work

This isn’t just a lottery. It’s a primitive for Bitcoin smart contracts.

Proves Zero-Collateral Games Are Possible on Bitcoin

No more $O(N^2)$ deposits. Players only risk their bet.

Demonstrates Trust-Minimized Offchain Coordination

The server verifies, doesn’t decide. Rules are open, deterministic.

Introduces Forfeit Trees as a Smart Contract Pattern

This can be reused for:

  • Decentralized exchanges
  • Prediction markets
  • Leader election
  • AI payments

Lowers the Barrier to Ark Development

arkive-sdk provides a clean, high-level API for building on Ark something the ecosystem needs.


How You Can Start Contributing

Want to work on Ark? Here’s how:

1. Learn the Basics

2. Set Up the Dev Environment

  • Run a local regtest Ark server either arkd or nigiri
  • Use the Rust SDK or TS SDK
  • Experiment with boarding, batch swaps, exits

3. Dwell into existing Issues

  • Submit PRs even small ones

4. Join the Community


Final Thoughts

Working on Ark taught me that Bitcoin is programmable just not in the way Ethereum taught us.

It’s programmable through ownership, signatures, and time-locked conditions.

And Ark unlocks that power with self-custody, onchain finality, and offchain speed.

My lottery isn’t the end, it’s a starting point for different gaming applications on Bitcoin.

If you’re a developer looking to build on Bitcoin, start here on Ark. The future is offchain, on Bitcoin.


Resources