Tether, the largest issuer in the stablecoin market, led the $5.2 million seed investment round for Ark Labs, which will enable programmable payments on Bitcoin. With this strategic move, Tether aims to enable USDT to be traded on different networks beyond smart contract-based blockchains and to expand the use of stablecoins. With the latest investment, Ark Labs’ total company-focused funding amount exceeded $7.7 million. In the seed round, companies such as Ego Death Capital, Epoch VC, Lion26, Sats Ventures and Contribution Capital, as well as former PayPal executive Ralph Ho, took part as an individual investor.
Bitcoin Based Local Payment Layer: Arkade
Developed by Ark Labs, Arkade offers a layer-2 application environment specifically designed for programmable financial transactions on Bitcoin. The company’s founders include developers experienced in software and blockchain projects. The aim of Arkade is for users to obtain an easy payment experience based directly on Bitcoin and self-custodial, without dealing with the complex channel management and liquidity requirements of infrastructures such as Lightning Network.
Arkade’s focus is on providing programmable transaction capacity, which is not included in the base layer of Bitcoin, with a new structure. It is known that programmable financial functions based on smart contracts play an important role in reaching large volumes of stablecoin transactions in networks such as Ethereum and Tron. Bitcoin, on the other hand, did not offer this functionality directly until now.
Off-Chain Transaction Layer as a Solution
By running transaction and smart contract mechanisms outside the main Bitcoin chain, Arkade ensures that the results are finalized on Bitcoin. The system aims to provide ultimate consensus security with the features of Bitcoin while overcoming transaction capacity limitations. The solution offered; It enables many different financial applications such as stablecoin transfers, holding and authorization transactions in commercial payments, as well as escrow processes.
It was designed with the goal of reducing complexity, especially for non-technical users, considering the user experience issues faced by the Lightning Network. The model developed with Arkade offers a more user-friendly and simple self-custody infrastructure.
Tether’s Strategic Approach and Rationale
Tether CEO Paolo Ardoino draws attention to an important detail in the history of stablecoin regarding the investment. The first USDT was initially issued with the Omni Layer protocol directly on Bitcoin and not on Ethereum. Ardoino states that increasing the reach of USDT on Bitcoin has always been one of the main goals, and Arkade stands out as the most realistic step towards this goal in the current technological landscape.
Paolo Ardoino states that re-expanding Tether’s USDT access over Bitcoin is one of his priorities, and the Arkade project offers a reliable solution at this point.
Due to the high volumes of stablecoins occurring on networks such as Ethereum and Tron, the majority of USDT assets circulate on these two networks. However, Bitcoin’s market size and deep liquidity increase the company’s motivation to diversify its risks in the stablecoin ecosystem. This approach aims to reach different user bases and accelerate the transition to new Bitcoin-based financial applications.
New Era for Programmable Payments in Bitcoin
The latest investment stands out as the latest in global initiatives to add new payment and financial functions on the Bitcoin network without changing the underlying protocol. Arkade’s short-term goal was announced as enabling programmable stablecoin transfers on Bitcoin with a simpler and more practical experience than the Lightning Network. The extent to which this approach will resonate throughout the ecosystem and whether it will add a new volume to stablecoin transactions will be shaped in the coming period.
