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naddr1qq…vwlaBitcoin-Backed Synthetic Dollars:
Architecture, Scaling, and the Path Forward
From Derivatives Hedging to Channel Factories, Ark, Spark, and Covenants
Research Compilation | February 2026
Abstract
This paper surveys the emerging landscape of Bitcoin-backed synthetic dollar systems and the scaling infrastructure required to deliver them to billions of users. We examine four generations of approaches: custodial derivatives-based hedging (Galoy Stablesats), tokenized assets on Bitcoin (Taproot Assets / Tether USDT on Lightning), non-custodial smart contracts (DLCs), and sovereign monetary experiments (El Salvador, Central African Republic). We then analyze the critical scaling bottleneck—Lightning Network channel management—and survey channel factory designs from the original 2017 Burchert-Decker-Wattenhofer proposal through modern implementations including Ark Protocol and Spark. Finally, we examine how proposed Bitcoin covenant opcodes (OP_CHECKTEMPLATEVERIFY and OP_CHECKSIGFROMSTACK) would transform these systems, potentially enabling non-interactive channel factories and payment pools capable of scaling Bitcoin payments infrastructure to serve a global population.
Keywords: Bitcoin, Lightning Network, synthetic dollars, stablecoins, Stablesats, Taproot Assets, channel factories, Ark Protocol, Spark, covenants, OP_CTV, OP_CSFS, delta-neutral hedging, perpetual inverse swaps, VTXOs, statechains
Table of Contents
Introduction: The Synthetic Dollar Problem
Galoy Stablesats: Derivatives-Based Synthetic USD
2.1 Core Mechanism: Delta-Neutral Hedging
2.2 The Dealer Engine (stablesats-rs)
2.3 Lightning Integration
2.4 Risk Profile
Taproot Assets: Tokenized Dollars on Bitcoin
3.1 Protocol Architecture
3.2 RFQ Protocol and Edge Nodes
3.3 Tether USDT on Lightning
Other Synthetic Dollar Projects
4.1 Ethena USDe (Ethereum)
4.2 Hermetica USDh (Bitcoin Runes)
4.3 Kollider and 10101 (Defunct)
Sovereign Bitcoin Adoption
5.1 Legal Tender Experiments
5.2 Strategic Bitcoin Reserves
The Scaling Bottleneck: Channel Factories
6.1 The Problem
6.2 Original Channel Factory Design (2017)
6.3 Efficiency Gains
6.4 Why Factories Were Never Deployed
Modern Channel Factories: Ark and Spark
7.1 Ark Protocol
7.2 Spark
7.3 Comparative Analysis
Covenants: CTV and CSFS
8.1 OP_CHECKTEMPLATEVERIFY (BIP-119)
8.2 OP_CHECKSIGFROMSTACK (BIP-348)
8.3 What Covenants Unlock for Channel Factories
8.4 Political and Activation Status
Synthesis: The Full Scaling Stack
Conclusion
References
**
Introduction: The Synthetic Dollar Problem
Bitcoin’s value proposition as a permissionless, censorship-resistant monetary network is undermined for everyday commerce by a fundamental property: price volatility. A merchant who accepts BTC for a $5 coffee may find that payment worth $4 or $6 by the end of the day. This volatility creates a psychological and practical barrier to adoption that no amount of ideological conviction can overcome for the median user.
The traditional solution—fiat-backed stablecoins like USDT and USDC—introduces dependencies that Bitcoin maximalists find unacceptable: bank accounts that can be frozen, corporate issuers that can be regulated into submission, and tokens that exist on competing blockchains (Ethereum, Tron) rather than on Bitcoin itself. This tension between dollar stability and Bitcoin sovereignty has spawned an entire ecosystem of creative engineering.
This paper traces the evolution of Bitcoin-backed synthetic dollar systems across four distinct approaches: (1) custodial derivatives hedging, where regular Lightning sats are kept dollar-stable through perpetual futures positions; (2) tokenized assets, where actual dollar-denominated tokens are issued on Bitcoin via Taproot Assets; (3) non-custodial smart contracts using Discreet Log Contracts (DLCs); and (4) sovereign monetary experiments attempting to integrate Bitcoin at the national level. We then examine the infrastructure layer—channel factories, Ark, Spark, and covenants—that could make these systems scale to billions of users.
2. Galoy Stablesats: Derivatives-Based Synthetic USD
2.1 Core Mechanism: Delta-Neutral Hedging
Stablesats, developed by Galoy (operators of the Blink wallet, formerly Bitcoin Beach Wallet in El Salvador), creates synthetic USD exposure without stablecoins, tokens, or any new on-chain primitives. The mechanism is entirely a backend accounting abstraction: when a user designates funds as "USD," Galoy’s dealer engine opens a corresponding short position on a perpetual inverse swap on the OKX derivatives exchange.
The hedging instrument is a perpetual inverse swap, chosen for several properties that make it ideal for this use case. First, unlike standard futures contracts, perpetuals have no expiry date, eliminating the need to "roll" positions and the associated slippage costs. Second, they are settled in BTC rather than USD, creating a natural hedge—the short position gains value in BTC terms precisely when BTC’s USD price falls, offsetting the collateral depreciation. Third, each contract has a $100 face value, enabling precise tracking of user balances.
The result is a delta-neutral position: the user’s satoshi balance may fluctuate in fiat terms, but the derivatives position compensates exactly, maintaining a stable $1 = $1 equivalence in the internal ledger. Critically, on the Lightning Network, payments from a USD account are completely normal—the recipient sees regular satoshis and has no way to know the sender was using a synthetic dollar balance.
2.2 The Dealer Engine (stablesats-rs)
The core implementation is stablesats-rs, a Rust rewrite of the original TypeScript dealer. It operates as a set of microservices communicating via Redis pub/sub:
user_trades module: Monitors the Galoy internal ledger for changes in aggregate USD liability. When a user deposits sats into their USD account, buys something with USD, or receives a payment, this module recalculates the total synthetic USD liability across all users and publishes a SynthUsdLiabilityPayload message.
hedging module: Subscribes to liability updates and executes trades on OKX to match the target. If users collectively hold $50,000 in synthetic USD, the dealer maintains a short position of 500 contracts ($100 face value each). Adjustments happen in near-real-time, with the microservices architecture supporting high availability through distributed processes.
The funding rate mechanism is central to system economics. Every 8 hours, the exchange settles a funding payment between long and short position holders. When the market is bullish (more longs than shorts), short holders receive funding—effectively earning yield on the hedge. When bearish, shorts pay longs. This funding flow directly impacts the profitability of operating a Stablesats service.
2.3 Lightning Integration
A common misconception is that Stablesats uses Taproot Assets or some token protocol on Lightning. It does not. Payments from USD accounts follow the standard Lightning payment flow: (1) User initiates a payment from their USD account. (2) Galoy converts the USD amount to satoshis at the current exchange rate. (3) A standard Lightning invoice is paid using regular sats—no special channel types, no asset protocols. (4) The recipient’s wallet receives normal satoshis. (5) The dealer adjusts the hedge position to reflect the reduced USD liability. This means Stablesats is fully interoperable with any Lightning wallet. The "dollar" exists purely as an accounting abstraction in Galoy’s ledger.
2.4 Risk Profile
The approach carries several inherent risks. Exchange counterparty risk is the most significant: if OKX becomes insolvent or freezes Galoy’s account, the hedge evaporates and user funds are exposed to BTC volatility. Auto-deleveraging (ADL) during extreme market moves can forcibly close positions. Persistent negative funding rates in extended bear markets create an ongoing cost drain. Galoy indicated interest in future DLC-based implementations that would eliminate the exchange dependency, though this was never realized before Galoy sold the Blink wallet in 2025 to focus on Lana, a Bitcoin-backed lending platform for banks.
3. Taproot Assets: Tokenized Dollars on Bitcoin
3.1 Protocol Architecture
Taproot Assets (formerly Taro), developed by Lightning Labs, takes a fundamentally different approach: rather than accounting tricks, it creates actual tokens on the Bitcoin blockchain. The protocol leverages Bitcoin’s Taproot upgrade to embed asset metadata as hashes within Taproot outputs. On-chain, a Taproot Asset output looks identical to any other Taproot spend—the asset details (type, amount, provenance) are stored off-chain in data structures called "Universes" that any interested party can verify.
Key protocol milestones include version 0.6 (June 2025), which introduced group_key identifiers for fungible assets and support for up to 20 inbound channels for reliability, and version 0.7 (December 2025), which added reusable addresses and supply commitment proofs for auditing the circulating supply of any issued asset.
3.2 RFQ Protocol and Edge Nodes
The innovation that makes Taproot Assets work on Lightning is the Request for Quote (RFQ) protocol combined with edge nodes. The core Lightning routing network continues to operate exclusively in BTC—no modification to existing routing nodes is needed. Currency conversion happens only at the "edges" of the network.
The flow works as follows: (1) A receiver who wants USDT generates a Taproot Asset invoice. (2) Their edge node provides a time-limited price quote via the RFQ protocol, locking in an exchange rate. (3) The sender’s wallet pays a standard Lightning invoice denominated in BTC. (4) The sender’s edge node converts BTC to USDT at the quoted rate. (5) The payment routes through the core Lightning network as normal BTC. (6) The receiver’s edge node converts BTC back to USDT and delivers the Taproot Asset. This architecture is elegant because it requires no changes to existing Lightning infrastructure—only the endpoints need Taproot Asset awareness.
3.3 Tether USDT on Lightning
In January 2025, Tether announced the issuance of USDT on Bitcoin and Lightning via the Taproot Assets protocol. This represents the arrival of the world’s largest stablecoin (approximately $140B in circulation across all chains) on Bitcoin’s native rails. Applications building on this infrastructure include Joltz, Speed, Lnfi Network, Amboss, and Voltage.
Property
Stablesats
Taproot Assets
What moves on Lightning
Regular sats
Regular sats (core); actual tokens (edges)
Where USD exists
Galoy internal ledger
As a token on Bitcoin
Trust requirements
Galoy + OKX exchange
Token issuer (Tether) + edge nodes
Protocol changes needed
None
tapd daemon required at endpoints
Interoperability
Any Lightning wallet
Any LN wallet (via edge conversion)
On-chain footprint
None (pure accounting)
Taproot outputs with embedded asset data
Table 1: Stablesats vs. Taproot Assets comparison
4. Other Synthetic Dollar Projects
4.1 Ethena USDe (Ethereum)
Ethena’s USDe applies the same delta-neutral hedging concept on Ethereum, reaching over $12 billion in supply by August 2025—making it the largest synthetic dollar by far and proving the model works at scale. Users deposit ETH, stETH, or BTC as collateral; Ethena opens matching short perpetual positions on Binance, Bybit, and OKX. Staking USDe into sUSDe earns yield from two sources: staking rewards on the underlying collateral and positive funding rate payments from the derivatives positions.
Ethena survived two major stress tests in 2025: the February Bybit hack and an October flash crash, demonstrating that venue diversification and a reserve fund can maintain the peg through extreme events.
4.2 Hermetica USDh (Bitcoin Runes)
Hermetica brings the synthetic dollar concept to Bitcoin’s L1 using the Runes protocol, with a secondary presence on Stacks L2. USDh uses the same perpetual inverse swap hedging strategy, with staking (USDh to sUSDh) offering up to 25% APY from funding rate yield. Launched in May 2024, adoption has been tepid—roughly $10,000 in daily volume on Magic Eden.
4.3 Kollider, 10101, and Standard Sats (Defunct)
Kollider built its own Lightning-native derivatives exchange, supporting synthetic USD, EUR, and theoretically any fiat currency with a liquid BTC futures market. They open-sourced LndHubX (an accounting layer) and LN Hedgehog (an auto-hedging tool). The custodial model avoided OKX dependency by running their own exchange, but ultimately failed.
10101 pursued the most trustless approach: Discreet Log Contracts (DLCs) that create smart contracts between two parties on Bitcoin, with oracle price feeds replacing exchange counterparties. This self-custodial model was the most promising for eliminating custody risk, but positions had expiry dates requiring periodic rolling. The project shut down before fully realizing its vision.
Risk
Affects
Mitigation
Funding rate (persistent negative)
All derivatives-based systems
Reserve fund; switch exchanges
Exchange counterparty
Stablesats, Ethena, Hermetica
Multi-exchange; DLC alternative
Auto-deleveraging
All exchange-based positions
Position sizing; liquidity buffers
Oracle manipulation
DLC-based (10101)
Multiple oracles; threshold signing
Issuer risk
Taproot Assets (Tether)
Regulatory compliance; reserves
Table 2: Core risks across synthetic dollar approaches
5. Sovereign Bitcoin Adoption
5.1 Legal Tender Experiments
El Salvador became the first country to adopt Bitcoin as legal tender in 2021, accumulating approximately 6,330 BTC in national reserves. However, research showed the currency was rarely used by the public for everyday transactions. Under IMF pressure, El Salvador rescinded Bitcoin’s legal tender status in 2025, though it retained its BTC holdings as a strategic reserve asset.
The Central African Republic adopted Bitcoin as legal tender in 2022 and launched Sango Coin—the only attempt at a Bitcoin-backed national currency. The Constitutional Court ruled citizenship and land sales provisions unconstitutional, less than 8 million of 200 million coins were sold, and the CAR reversed Bitcoin’s legal tender status within a year.
5.2 Strategic Bitcoin Reserves
A more pragmatic approach has emerged: holding BTC as a strategic reserve asset alongside gold and foreign currencies. As of early 2026, at least 27 countries hold Bitcoin in some form. The United States is the largest sovereign holder, primarily from law enforcement seizures. In March 2025, a Trump executive order designated BTC as a strategic asset, and several U.S. states have passed Strategic Bitcoin Reserve legislation. Bhutan mines BTC using state-backed hydroelectric power. Thirteen nations have active legislative proposals for sovereign BTC adoption.
No country has successfully backed its currency with Bitcoin. BTC’s volatility is incompatible with monetary policy needs—a 30% BTC price drop would require either massive reserves to defend a peg or allow the currency to depeg. The synthetic dollar approach is more practical than attempting sovereign currency backing.
6. The Scaling Bottleneck: Channel Factories
6.1 The Problem
All of the synthetic dollar and tokenized asset systems described above ultimately depend on the Lightning Network for payment delivery. Lightning’s fundamental scaling constraint is that every payment channel requires an on-chain Bitcoin transaction to open and another to close. Bitcoin’s blockchain processes roughly 300,000–400,000 transactions per day. If Lightning scales to billions of users, channel management alone would consume all available block space, defeating the purpose of having a second layer.
6.2 Original Channel Factory Design (2017)
Channel factories were proposed by Conrad Burchert, Christian Decker, and Roger Wattenhofer in their 2017 paper "Scalable Funding of Bitcoin Micropayment Channel Networks." The design introduces an intermediate layer between the Bitcoin blockchain and the Lightning Network.
The mechanism works as follows: a group of users (say, 20) each deposit funds into a single on-chain N-of-N multisig address. This single transaction replaces the 20+ individual channel-open transactions that would otherwise be needed. From this shared UTXO, the group creates off-chain transactions that allocate funds into pairwise Lightning channels. These channel-open transactions are signed by all participants but never broadcast to the blockchain. They exist as a "backup" that any participant can broadcast if needed for dispute resolution.
The channels created within the factory operate exactly like standard Lightning channels—payments, HTLCs, routing all work identically. The factory adds a new capability: funds can be moved between channels, new channels can be created, and old ones removed, all without any on-chain transaction, as long as all factory participants cooperate.
6.3 Efficiency Gains
For a group of 20 users with 100 intra-group channels, the on-chain cost is reduced by approximately 90% compared to opening 100 individual Lightning channels. With Schnorr signature aggregation (now available via Taproot), this can improve to 96%. Beyond channel opening costs, factories also solve the rebalancing problem: channel liquidity can be redistributed within the factory without touching the blockchain.
6.4 Why Factories Were Never Deployed
The original design has a critical scalability limitation: every update to the factory state requires every participant to be online and sign off on the change. As the number of participants grows, the coordination overhead, required signatures, and pre-signed exit paths grow exponentially. If even one participant goes offline or becomes uncooperative, the entire factory cannot update. This interactivity requirement made the original design impractical for real-world deployment over the eight years since its proposal.
7. Modern Channel Factories: Ark and Spark
In 2025, two projects emerged that effectively realize the goals of channel factories with new designs that overcome the interactivity problem. Both are based on shared UTXOs, both are natively compatible with Lightning, and both work within Bitcoin’s current consensus rules without requiring soft forks.
7.1 Ark Protocol
Ark was conceived in May 2023 by Burak, a Lightning developer, motivated by the realization that Lightning’s onboarding complexity was an insurmountable barrier for average users. Two companies—Ark Labs and Second—are building independent implementations.
Ark is a client-server protocol where users coordinate payments via a central Ark Operator while retaining control over their own bitcoin. The key abstraction is the Virtual Transaction Output (VTXO). A single on-chain UTXO (Batch Output) is partitioned into multiple VTXOs, each independently spendable by its owner. This is achieved by creating a tree of off-chain transactions, with each user holding the branch and leaf transactions that prove their specific allocation.
In-round (Batch Swap) payments: The Ark Operator periodically organizes "rounds" where users can exchange old VTXOs for new ones backed by a fresh on-chain Commitment Transaction. These achieve true Bitcoin-level finality once the commitment confirms.
Out-of-round (OOR) payments: For instant transfers between rounds, the Ark Operator co-signs a transfer. The trust model relies on the sender and Ark server not colluding to double-spend—a weaker guarantee, but sufficient for small everyday payments.
VTXO Expiry: VTXOs have an expiration period. Users must periodically refresh by participating in a new round. If a user fails to refresh, the Ark Operator could theoretically sweep the expired funds. This creates a liveness requirement analogous to Lightning’s channel monitoring, but with a much longer time window.
7.2 Spark
Spark, built by Lightspark (David Marcus), takes a different approach based on statechains—a concept created by Ruben Somsen in 2018. Spark extends statechains with "leaves," allowing users to transact arbitrary amounts rather than whole UTXOs.
Users deposit BTC into a shared address co-signed by themselves and the Spark Entity (SE), a distributed group of Spark Operators. Transfers work by operators generating new key shares for the recipient and deleting their old key shares. If at least one operator honestly deletes, the previous owner cannot spend the funds. This is a 1-of-N trust model.
Spark is explicitly designed for stablecoin support from day one, with native integration of Taproot Assets and RGB. USDT and USDC can be issued and transferred within the Spark network, retaining the ability to unilaterally exit on-chain. The critical limitation is that finality is not cryptographically provable—you cannot verify that operators actually deleted their keys.
7.3 Comparative Analysis
Property
Ark
Spark
Lightning (Today)
Architecture
VTXO rounds + Ark Operator
Statechains + distributed SOs
Pairwise payment channels
Trust model
Server + sender non-collusion (OOR); on-chain finality (in-round)
1-of-N operators honest (key deletion)
2-of-2 multisig; penalty-based
Provable finality
Yes (in-round)
No
Yes (on-chain settlement)
Token support
Future (Taproot Assets)
Native (USDT, USDC, RGB)
Via Taproot Assets edge nodes
Onboarding cost
Near zero
Near zero
1 on-chain tx + inbound liquidity
State expiry
Yes (must refresh)
No
N/A (channels persist)
Operator model
Single server
Distributed entity
Peer-to-peer
Privacy from operator
No
No
Onion routing (partial)
Unilateral exit
Yes (broadcast VTXO tree)
Yes (pre-signed exit tx)
Yes (force close)
Status (Feb 2026)
Signet/testnet
Live
Mature
Table 3: Comprehensive comparison of Ark, Spark, and Lightning
8. Covenants: CTV and CSFS
While Ark and Spark demonstrate that practical channel factory-like systems can be built within Bitcoin’s current consensus rules, both would benefit enormously from proposed covenant opcodes. The combination of OP_CHECKTEMPLATEVERIFY (CTV, BIP-119) and OP_CHECKSIGFROMSTACK (CSFS, BIP-348) has emerged as the frontrunner covenant proposal.
8.1 OP_CHECKTEMPLATEVERIFY (BIP-119)
Today, Bitcoin Script can only answer "who is allowed to spend this output?" via signature verification. CTV adds a new question: "how must this output be spent?" It takes a 32-byte hash commitment and requires that any transaction spending the output matches the commitment across its version, locktime, number of inputs and outputs, output scripts and amounts, and input sequences. In effect, a coin locked with CTV has a pre-authorized spending path baked into it at creation time—a covenant.
Key use cases include: Congestion control—during fee spikes, a service creates a single CTV-locked output committing to pay 1,000 users, with expansion happening later when fees drop. Vaults—time-locked spending paths where theft can be detected and reversed. Non-interactive channel factories—a factory creator commits to the entire exit tree in a single hash, eliminating the requirement for every participant to pre-sign.
8.2 OP_CHECKSIGFROMSTACK (BIP-348)
CSFS is a more general primitive. While Bitcoin’s existing OP_CHECKSIG verifies a signature against the spending transaction’s data, CSFS verifies a signature against any arbitrary message provided on the stack. This enables oracle attestations on-chain, delegation of spending rights, and when combined with CTV, the ability to emulate SIGHASH_ANYPREVOUT (APO) and enable LN-Symmetry (eltoo)—a cleaner channel update mechanism where only the latest state is needed rather than storing every prior state for penalty enforcement.
8.3 What Covenants Unlock for Channel Factories
Eliminating the interactivity problem: CTV enables precommitted exit paths without exhaustive pre-signing. A factory can commit to exit transactions at creation time, with each participant knowing they can unilaterally exit—reducing both interactivity and complexity.
Supercharging Ark: With CTV, the Ark Operator can commit to entire VTXO tree structures in a single hash rather than gathering individual signatures from every participant.
Payment pools / joinpools: CTV enables shared UTXOs where participants enter and exit without coordinating with every other participant—a generalization beyond pairwise channels.
Better DLCs: CSFS enables on-chain oracle attestation, benefiting synthetic dollar systems that use DLC-based hedging.
8.4 Political and Activation Status
CTV+CSFS has emerged as the clear frontrunner among Bitcoin Core developers, gaining visibility at OPNEXT and Bitcoin++ conferences. However, Bitcoin’s consensus process is deliberately conservative. Critics argue much of what CTV and CSFS enable is already possible through pre-signed transactions. Others prefer OP_CAT for more general-purpose programmability. Current estimates suggest a covenant-related soft fork could happen as early as 2026, though activation requires over 90% miner signaling support.
9. Synthesis: The Full Scaling Stack
Layer
Technology
Function
User Interface
Wallet apps (Blink, Phoenix, etc.)
Dollar-denominated payments UX
Asset Layer
Taproot Assets, Stablesats hedging
USDT tokens or synthetic USD accounting
Payment Routing
Lightning Network
Instant, low-fee payment delivery
Channel Management
Ark / Spark (Channel Factories)
Shared UTXOs, VTXOs; reduced on-chain footprint
Programmability
CTV + CSFS (Covenants)
Non-interactive factories; payment pools; vaults
Settlement
Bitcoin Blockchain
Final, trustless settlement layer
Table 4: The full Bitcoin scaling stack for synthetic dollar payments
Each layer addresses a specific limitation of the layer below it. Bitcoin provides settlement finality but limited throughput. Lightning provides instant payments but requires on-chain transactions for channel management. Channel factories (Ark/Spark) amortize on-chain costs across many users but currently require complex interactivity. Covenants (CTV+CSFS) eliminate the interactivity requirement. And the asset layer provides the dollar stability that end users demand.
10. Conclusion
The landscape of Bitcoin-backed dollar systems has evolved rapidly from a single hackathon concept (Stablesats, 2022) to a multi-layered ecosystem incorporating real token protocols, novel Layer 2 designs, and proposed consensus upgrades. Several key themes emerge:
The hedging model works at scale. Ethena’s $12B+ USDe proves that delta-neutral derivatives hedging can maintain a dollar peg through extreme market conditions.
Trust is a spectrum, not a binary. The projects range from fully custodial (Stablesats with OKX dependency) through trust-minimized (Ark, Spark) to the unrealized ideal of trustless DLC-based hedging.
Channel factories are finally becoming real. After eight years as a theoretical concept, practical implementations are live or nearing mainnet deployment, working within Bitcoin’s current consensus rules.
Covenants are the next unlock. CTV and CSFS would eliminate interactivity requirements that have historically limited multi-party constructions on Bitcoin.
Lightning remains indispensable. Every Layer 2 system examined ultimately interoperates through Lightning. The emergence of new scaling layers validates rather than threatens Lightning’s position as the universal payment routing backbone.
The path from a single derivative position on OKX to a global, trust-minimized, dollar-stable payment network on Bitcoin is long but increasingly visible. The pieces are falling into place; the question is no longer whether it’s technically possible, but how quickly the community can align on the consensus changes needed to reach the destination.
References
[1] Burchert, C., Decker, C., Wattenhofer, R. (2017). "Scalable Funding of Bitcoin Micropayment Channel Networks." IACR Cryptology ePrint Archive.
[2] Poon, J., Dryja, T. (2016). "The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments."
[3] Rubin, J. (2020). "BIP-119: OP_CHECKTEMPLATEVERIFY." Bitcoin Improvement Proposal.
[4] BIP-348: OP_CHECKSIGFROMSTACK. Bitcoin Improvement Proposal (draft).
[5] GaloyMoney. "stablesats-rs: Rust dealer engine." GitHub repository. github.com/GaloyMoney/stablesats-rs
[6] Lightning Labs. "Taproot Assets Protocol Specification." docs.lightning.engineering
[7] Burak (2023). "Ark: A Second Layer Protocol for Bitcoin." ark-protocol.org
[8] Lightspark. "Spark Protocol Documentation." spark.money
[9] Somsen, R. (2018). "Statechains: Non-custodial Off-chain Bitcoin Transfer."
[10] Ethena Labs. "USDe: Internet Bond." ethena.fi/documentation
[11] Hermetica. "USDh: Bitcoin-Native Synthetic Dollar." hermetica.fi
[12] Bitcoin Optech. "Channel Factories Topic." bitcoinops.org/en/topics/channel-factories/
[13] Bitcoin Optech. "OP_CHECKTEMPLATEVERIFY Topic." bitcoinops.org/en/topics/op_checktemplateverify/
[14] Decker, C., Russell, R., Osuntokun, O. (2018). "eltoo: A Simple Layer2 Protocol for Bitcoin."
[15] Hiro Systems. "State of Bitcoin Layers in 2025." hiro.so/blog
[16] Seth for Privacy. "Spark and Ark: A Look at Our Newest Bitcoin Layer Twos." Bitcoin Magazine, October 2025.
[17] Roy Sheinfeld. "Ark and Spark: The Channel Factories We've Been Waiting For." Bitcoin Magazine, September 2025.
[18] Bitfinex Blog. "What Covenant Proposals Are Being Looked at for Bitcoin in 2025?" February 2025.
[19] Ark Labs. "Ark Protocol Explainer." docs.arklabs.xyz/ark/
[20] BitBox Blog. "Bitcoin Scalability, Lightning, and the Road to Ark." December 2025.
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