1. Executive Summary
Arch Network is a bridgeless execution platform designed to enhance Bitcoin's capabilities by directly enabling fast, secure, and fully-verifiable smart contracts on the Bitcoin base layer. By eliminating the need for bridges, Arch maintains Bitcoin's full liquidity and security while providing a seamless user experience.
The platform's architecture includes a specialized Arch Virtual Machine (ArchVM), a decentralized Proof-of-Stake Verifier Network, and a novel FROST + ROAST multisig architecture. Arch has gained significant traction, with partnerships, substantial funding, and a large community presence. Its vision is to build permissionless financial rails for a Bitcoin-denominated world, addressing the limitations of Bitcoin's native scripting and existing layer 2 solutions.
2. About the Project
2.1. Vision:
Arch Network aims to create permissionless financial rails for a Bitcoin-denominated world. Its goal is to enhance Bitcoin’s capabilities by enabling fast, secure, and fully verifiable smart contracts without bridging assets.
Thus, it preserves Bitcoin’s monetary integrity while unlocking an open, fast, and expressive economy. Arch seeks to connect emerging decentralized BTC-native applications like DeFi protocols, gaming, prediction markets, and social networks.
2.2. Problem:
Bitcoin’s native scripting language is limited, prioritizing security over expressivity, which restricts developers from building complex financial applications like automated market makers (AMMs) or pool-based lending protocols.
Key challenges include:
Poor UX and Fractured Liquidity: Bitcoin’s 10-minute block times create latency, driving users away. Bridging to layer 2 solutions or other chains fractures liquidity and introduces custody risks.
Limited Scripting and Expressivity: Bitcoin’s Script language lacks loops and expressivity, limiting DeFi and capital formation.
Layer 2 and Metaprotocol Limitations: Layer 2 solutions require bridging, transferring trust from Bitcoin’s secure base layer. Metaprotocols like Ordinals and Runes struggle with slow block times and lack asset transfer capabilities, siloing assets, and reducing interoperability.
2.3. Solution:
Arch Network addresses the challenges of interacting with Bitcoin’s base layer by offering a bridgeless execution platform that eliminates the need for asset wrapping or bridging. At its core is ArchVM, a UTXO-aware execution environment built on an extended Berkeley Packet Filter (eBPF) virtual machine, enabling direct and efficient interaction with Bitcoin.
Additionally, the platform optimizes Bitcoin assets for DeFi by incorporating UTXO optimization, state sharding, real-time mempool indexing, and reliable block inclusion to enhance liquidity and performance for decentralized finance applications.
3. Market Analysis
Arch Network operates within the rapidly growing Bitcoin layer 2 solutions sector, a critical segment of the broader cryptocurrency and blockchain technology market. By addressing Bitcoin’s limitations, such as slow transaction speeds, high fees, and limited programmability, layer 2 solutions enable advanced use cases like decentralized finance (DeFi), non-fungible tokens (NFTs), and other decentralized applications (dApps), unlocking the potential of Bitcoin’s over $2T market capitalization.
The number of Bitcoin layer 2 projects has surged from 10 in 2021 to 75 as of late 2024, reflecting robust interest and innovation in this space. Over $447M has been invested in Bitcoin layer 2 projects since 2018, with 36% of this funding allocated in 2024 alone. Galaxy’s report estimates that over $47B of BTC could be bridged into Bitcoin L2s by 2030.
Grand View Research estimated the global blockchain technology market size at USD 31.28B in 2024 and is projected to grow at a CAGR of 90.1% from 2025 to 2030. Blockchain's decentralized and immutable ledger system ensures the integrity and transparency of transactions, making it especially appealing to sectors such as finance, healthcare, and supply chain management.
3.1. Competition:
The Bitcoin layer 2 solutions market is highly competitive, with several established projects offering diverse approaches to scaling and enhancing Bitcoin’s capabilities. Below is a detailed overview of key competitors, highlighting their strengths and how Arch Network differentiates itself.
Competitor | Description | Strengths | Limitations |
A layer 2 protocol enabling smart contracts and dApps on Bitcoin, using the Proof-of-Transfer (PoX) consensus mechanism and STX token. | Significant traction with over $121M in total value locked (TVL); strong developer ecosystem with the Clarity programming language. | Relies on a separate blockchain, which may introduce complexity compared to Arch’s bridgeless approach. | |
A layer 2 solution using ZK-Rollup technology to enhance scalability and efficiency, supporting Bitcoin-native protocols like BRC-20. | Rapid growth with over $700M in TVL; EVM compatibility broadens developer appeal. | ZK-Rollup complexity and reliance on decentralized oracles may introduce security challenges. | |
Lightning Network | A payment protocol for fast, low-cost off-chain transactions, ideal for micropayments. | Widespread adoption since 2018; excels in peer-to-peer payments with high transaction throughput. | Limited to payment-focused use cases, lacking robust smart contract functionality. |
Rootstock | A sidechain offering Turing-complete smart contracts and EVM compatibility, secured by Bitcoin’s proof-of-work. | Operational since 2018 with 100% uptime; supports DeFi applications with rBTC. | Requires a two-way peg, introducing trust assumptions compared to Arch’s direct base layer interaction. |
Liquid Network | A federated sidechain by Blockstream, focusing on fast, confidential transactions and asset issuance. | Suited for institutional use with features like confidential transactions and L-BTC. | The federated model relies on trusted entities, potentially less decentralized than Arch’s approach. |
4. Features
ArchVM: A UTXO-aware execution environment based on an extended Berkeley Packet Filter (eBPF) virtual machine, enabling direct interaction with Bitcoin’s base layer without bridging or wrapping assets.
Decentralized Verifier Network: A stake-weighted delegated Proof-of-Stake (dPoS) consensus model for coordinating Bitcoin-native transactions and smart contracts, with a fully permissionless validator set.
Cryptographic Multisig: Utilizes FROST and ROAST signature schemes for secure, conditional execution without moving assets off the base layer.
Seamless Wallet Integration: Native compatibility with popular Bitcoin wallets (e.g., Xverse, Unisat, Magic Eden, Ledger) via Taproot address integration, eliminating the need for new wallets or bridging.
Trust-Spectrum Flexibility: Offers customizable security levels, including direct Bitcoin settlement or sub-second block times with Arch’s pre-confirmation system.
Supercharged Bitcoin Assets: Features UTXO optimization, state sharding, real-time mempool indexing, and reliable block inclusion to improve liquidity for DeFi applications.
5. Token
The Arch token will be the network's native token, used for consensus in the decentralized Proof-of-Stake Verifier Network. $ARCH will be used for staking in the dPoS consensus model, allowing permissionless participation to secure the network. This is stake-weighted dPoS, where validators are incentivized by staking ARCH.
It progressively decentralizes and enhances censorship resistance using FROST and ROAST signature schemes. Detailed tokenomics, such as total supply and distribution, are not publicly available, which may be a consideration for investors seeking transparency.
6. Traction
Arch Network collaborates with projects like Saturn, Funky Bit, and Wasabi Protocol, fostering ecosystem growth. It has a strong presence on X, with 239k followers and 111k members on Discord.
Arch Network has a Request for Solutions (RFS) program to fund innovative projects, a go-to-market strategy, and ongoing incentivized testnet phases with tasks for users to earn points and qualify for potential airdrops.
7. Team
Arch Network is led by co-founder and CEO Matt Mudano and co-founder and CTO Amine ElQaraoui. Amine has previous work experience as an AI and Data engineer. Other team members include CMO, Nicholas Fouriezos, VP of Engineering, Brian Hoffman, and Head of Growth, Jennifer Dean.
8. Investors
Arch Network has raised a total of $20M for a valuation of $200M. The first was a $7M seed in May 2024, led by Multicoin Capital and participated in by Santiago R. Santos, OKX Ventures, CMS Holdings, Big Brain Holdings, and others. The second was a $13M Series A in April 2025 from Pantera Capital and Multicoin Capital.
9. Conclusion
Arch Network represents a significant innovation in the Bitcoin ecosystem by introducing bridgeless programmability. Its technical architecture, including ArchVM, the decentralized verifier network, and cryptographic multisig, positions it as a potential leader in enabling smart contracts on Bitcoin.
The project has achieved notable traction with partnerships, substantial funding, and a growing community. However, it faces competition from other layer 2 solutions and metaprotocols, and its success will depend on execution, developer adoption, and scaling while maintaining security. The lack of detailed tokenomics may raise questions, but overall, Arch Network is a promising project with the potential to unlock new use cases and liquidity on Bitcoin.