Closing the Lightning Loop: Bitcoin's Missing Layer Secretly Goes Live
Ten months ago, we embarked on a mission to tackle one of Bitcoin's longest-standing challenges: building truly accessible payment infrastructure. We set out to "close the Lightning liquidity loop" using a combination of Ark's VTXO system alongside virtual swap providers.
Earlier this month at Baltic Honeybadger 2025 in Riga, that vision became reality as Arkade, our Ark flagship implementation, processed its first mainnet payments.
Unbeknownst to most, every Lightning payment at the conference ran through Arkade’s infrastructure. Conference attendees paid with popular wallets such as Phoenix, Wallet Of Satoshi or Aqua with no prior integration or knowledge about the experiment. Merchants received VTXOs instead of managing channels and the entire payment flow was powered by our Boltz Lightning swap integration.
Bitcoin's payment infrastructure had been fundamentally transformed beneath the surface, invisible to every user.
This deployment marked more than just a technical milestone. It validated an approach we've been building toward since Ark was first conceived, ushering in a new generation of Bitcoin applications and services.
Why the Loop Needed Closing
Lightning's prescribed adoption model faces fundamental challenges. The promise of self-sovereign, peer-to-peer payments has been hampered by operational complexity, poor user experience, and unreliable economics, pushing many toward custodial solutions that undermine Bitcoin's trust-minimized ethos.
Beyond technical hurdles, retail commerce use cases don't align with Lightning's bidirectional channels where payments typically flow one way: from consumers to merchants, creating imbalances that demand constant, costly management. This is where Boltz comes in as a professional service provider, taking care of managing liquidity and imbalances. - Michael, CTO of Boltz
Even with Lightning Service Providers (LSPs) easing some burdens, the ecosystem needs a different approach. The swap model had been quietly evolving for years as a parallel path, offering a radically different vision where edge users, the consumers and merchants at the periphery of the network, wouldn't manage channels at all. Instead, they would simply swap in and out of Lightning, leaving channel management to core professionals with bidirectional flows.
Early iterations showed promise but limitations. One of the pioneers of the idea, Muun wallet, proved HTLC-based swaps could deliver superior UX, but mempool fee volatility made economics unsustainable. Sidechains-based solutions like Aqua traded security for efficiency.
Arkade charts a better path: batched, scalable swaps that preserve self-custody while letting professional liquidity providers and operators do what they do best: provide reliable and competitive services. Users can simply swap in and out as needed, using those rails to carry their payments across the network.
Building the Stack
Since last October, we have been busy building three critical components that would help bring this thesis to production.
Fulmine is our answer to swap operator needs: a Bitcoin wallet daemon that integrates Ark protocol's batched transaction model with Lightning Network infrastructure. Built specifically for routing nodes, service providers, and payment hubs, it enables optimized liquidity management while minimizing onchain fees, without compromising on self-custody. Fulmine laid the essential groundwork for integrating with professional swap providers and coordinated every swap operation during the conference, demonstrating our approach's viability in production.
Our partnership with Boltz builds directly on this foundation. As ecosystem leaders in swaps, already facilitating seamless exchanges between Lightning and sidechains like Liquid, they quickly grasped Arkade's potential. Far from competing, they were quick to recognize the potential for their business, expanding their role as one of Lightning's major liquidity backbone. Their operational expertise proved invaluable during integration.
Finally, a last-mile sprint by our esteemed CTO, Mr. Kukks, resulted in a BTCPayServer plugin that completed the merchant experience and brought everything home. We built custom tooling that abstracted away both Lightning and Arkade complexity entirely. Merchants wouldn't need to understand channels, manage liquidity, or even know what a VTXO was. They would simply receive payments, with all technical details fading into the background where infrastructure belongs.
Riga: Where Theory Met Reality
All three components came together at Baltic Honeybadger 2025, where Arkade went live. Every payment processed, every merchant paid, zero friction. The infrastructure simply worked.
Conference attendees used their existing Lightning wallets without any modifications or special instructions. They scanned QR codes and paid, just as they would at any Lightning-enabled merchant. Behind the scenes, every one of those payments routed through Arkade swaps via our Boltz integration. Merchants received VTXOs instead of channel balances, though they never needed to know the difference. All concepts of channels and liquidity management were completely abstracted away.
For the conference organizers, the deployment stood out:
What Arkade achieved in Riga is nothing short of historic. This is the kind of breakthrough that pushes Bitcoin forward - and it’s exactly why Baltic Honeybadger was created: to showcase the builders turning bold ideas into reality. - Anna, CEO of Hodl Hodl
Over 1,300 payments processed. More than $20,000 (0.2 BTC) in volume. But the most telling metric wasn't these numbers or our success rate. It was that nobody noticed. No liquidity concerns. No learning curve for users. Payments went through without a hitch, which in the end is all that matters.
No permission needed. No consensus required. You can just do things.
This is the kind of cypherpunk engineering that pushes Bitcoin forward. No hype, no token - just hard work closing loops and making sats flow. Massive respect to the builders-this is a real breakthrough for Bitcoin. - Max Kei, CEO of Debifi
Opening the Gates
The infrastructure that powered Riga will soon be available for broader deployment. Private mainnet partnerships are open for infrastructure providers ready to integrate Arkade into their services. The BTCPayServer integration and .NET SDK are open-sourced for developers to explore and test, with production-ready versions coming soon.
Lightning operators can begin exploration of the Fulmine stack immediately, gaining the same efficient liquidity management that worked flawlessly at the conference. Professional liquidity providers can begin offering Arkade-powered services to their users. What worked in Riga will work anywhere.
The same approach that abstracted complexity for merchants works equally well for consumer wallets. We demonstrated this with our Arkade reference wallet at the conference, a completely nodeless implementation where users never touch channel management. Powered by the same Boltz swaps that processed merchant payments, it allowed users to seamlessly pay any Lightning invoice without running infrastructure. No Lightning node required, just swap in when receiving, swap out when sending. The edge users on both sides of the transaction could focus on what matters: making and accepting payments.
The Future Being Built Today
Riga marked a turning point: Arkade has arrived, proving our vision on mainnet and poised for public deployment. The deployment validated our thesis, closing Lightning’s liquidity loop with professional operators managing complexity while users transact seamlessly. More than that, it showed Ark is no longer a concept but a working reality.
Swaps are just the first step in Arkade’s transformative architecture. Virtual Transaction Outputs, batched settlement, and horizontal scaling unleash a new frontier of Bitcoin applications that can fulfill its promise as programmable money.
We're building this future methodically, deployment by deployment, prioritizing real-world validation over theoretical hang-ups. Ark has arrived, not just to reshape Lightning but to redefine Bitcoin's potential. Join us in crafting the next generation of trust-minimized applications.
For partnership inquiries: [email protected]
Build your own Arkade wallet today: docs.arkadeos.com
Open source resources: