<blockquote>
<p>What happens if the on-chain transaction fails (with funds returning to the ASP)?</p>
</blockquote>
<p>Ark transactions are atomic (via Anchored transactions) so if the ASP's on-chain transaction (aka Round tx) fails, Bob never received his VTXO. Just like with Bitcoin, Bob only has a UTXO after Alice's payment is confirmed.</p>
<p>VTXO's are Bitcoin transactions that spent a part of an existing UTXO.</p>
<p>Having said that, Alice can send a VTXO to Bob instantaneously, by sending him a OOR (Out Of Round) VTXO. In this case, Alice is forfeiting to Bob the right to spend a part of an existing UTXO, i.e. Alice is forfeiting her VTXO to Bob.</p>
<p>The disadvantage of OOR VTXOs for Bob is that Alice (colluding with the Server) can double spend her VTXO, so there is trust involved. Bob can fix this by trading this OOR VTXO for a VTXO in the next round.</p>
<p>VTXOs are completely trustless, Bob can anytime broadcast it to mainchain and get a UTXO.</p>
<p>Know more about Anchored transactions, VTXOs and Ark in general here:</p>
<p><a href="https://joaobordalo.com/labs/ark/" rel="nofollow noreferrer">https://joaobordalo.com/labs/ark/</a></p>

CC BY-SA 4.0
2024-12-31T10:37:42.620Z
2024-12-31T10:37:42.620Z
bordalix
<p>A Scenario Question: If Alice sends UTXOs to an ASP to issue vTXOs for Bob, the vTXO needs to be instantaneous, but the ASP’s on-chain transaction may take a long time to confirm. What happens if the on-chain transaction fails (with funds returning to the ASP)? In this case, could the ASP act maliciously by issuing the vTXO to Bob without backing it up, leaving Bob with unredeemable vTXOs when he tries to cash them out later?</p>
<p>Possible Solution: Could the ARK protocol ensure that the ASP only uses Alice's UTXOs after the on-chain transaction for Bob is successfully broadcast and confirmed? Additionally, can Bob's vTXOs indicate whether they are backed by UTXOs or not, notify him of any failure, and maintain a &quot;Not Backed&quot; status until the ASP backs it up with a new UTXO transaction? This would ensure that the ASP can only use Alice's funds after successfully creating a UTXO for Bob, with the entire process being publicly verifiable while respecting user privacy.</p>

<ark>
How Can ARK Protocol Ensure Trust and Accountability in Instant vTXO Issuance with Delayed On-Chain Transactions?
Harshit Kedia
# How Can ARK Protocol Ensure Trust and Accountability in Instant vTXO Issuance with Delayed On-Chain Transactions?

(Asked by: username_0 on 2024-12-31)

A Scenario Question: If Alice sends UTXOs to an ASP to issue vTXOs for Bob, the vTXO needs to be instantaneous, but the ASP’s on-chain transaction may take a long time to confirm. What happens if the on-chain transaction fails (with funds returning to the ASP)? In this case, could the ASP act maliciously by issuing the vTXO to Bob without backing it up, leaving Bob with unredeemable vTXOs when he tries to cash them out later?

Possible Solution: Could the ARK protocol ensure that the ASP only uses Alice's UTXOs after the on-chain transaction for Bob is successfully broadcast and confirmed? Additionally, can Bob's vTXOs indicate whether they are backed by UTXOs or not, notify him of any failure, and maintain a "Not Backed" status until the ASP backs it up with a new UTXO transaction? This would ensure that the ASP can only use Alice's funds after successfully creating a UTXO for Bob, with the entire process being publicly verifiable while respecting user privacy.

**Tags:** ark


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## 1 answers

### Answer by username_1 on 2024-12-31. Score: 0

> What happens if the on-chain transaction fails (with funds returning to the ASP)?

Ark transactions are atomic (via Anchored transactions) so if the ASP's on-chain transaction (aka Round tx) fails, Bob never received his VTXO. Just like with Bitcoin, Bob only has a UTXO after Alice's payment is confirmed.

VTXO's are Bitcoin transactions that spent a part of an existing UTXO.

Having said that, Alice can send a VTXO to Bob instantaneously, by sending him a OOR (Out Of Round) VTXO. In this case, Alice is forfeiting to Bob the right to spend a part of an existing UTXO, i.e. Alice is forfeiting her VTXO to Bob.

The disadvantage of OOR VTXOs for Bob is that Alice (colluding with the Server) can double spend her VTXO, so there is trust involved. Bob can fix this by trading this OOR VTXO for a VTXO in the next round.

VTXOs are completely trustless, Bob can anytime broadcast it to mainchain and get a UTXO.

Know more about Anchored transactions, VTXOs and Ark in general here:

<https://joaobordalo.com/labs/ark/>


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