The Lightning Labs team, thanks to raising $70 million in funding, plans to develop the Bitcoin network. The goal is to leverage the fruits of November’s Taproot update and introduce stablecoins.
Continued innovation for Bitcoin
Many of us have long forgotten about the update known as Taproot that the Bitcoin network experienced last November. Recall that Taproot included three key improvements. These were Schnorr Signatures, Tapscript and Merkelized Abstract Syntax Trees (MAST). This allowed the largest cryptocurrency network to increase performance, improve privacy, and also flexibility.
Meanwhile, on Tuesday, April 5, Elizabeth Stark, co-founder and CEO of Lightning Labs introduced the Taro protocol. This protocol is an open-source software powered by the Lightning Network. With the help of the Taproot update, this protocol is able to bring stablecoins to the Bitcoin network.
Lightning Labs announced that it has raised $70 million in Series B funding to realize the innovation. Participants included Valor Equity and Baillie Gifford, Goldcrest Capital, Kingsway, Moore Strategic Ventures, Brevan Howard, Robinhood CEO Vlad Tenev, NYDIG and Silvergate CEO Alan Lane.
Ryan Gentry, Lightning Labs’ director of business development, said the protocol is “uniquely equipped by Taproot to embed issuance terms in MAST without revealing all the details to the blockchain.
This gives Bitcoin more capabilities than before. By using MAST, Taro will be able to embed data for new assets in such a way that they are read as Bitcoin through the network, allowing them to be transferred. The idea is to be a sort of asset overlay for Bitcoin, which will be verified along with the parent network’s transactions.
Lightning Labs has published Taro’s technical specification as a Bitcoin Improvement Proposal (BIP) so that the protocol can be built based on feedback from the broader developer community. As Stark points out, however, the Taro protocol itself is not stablecoin, but the infrastructure for their flow. It’s Taro’s own reliance on the Bitcoin network that stablecoins will be able to create.
The steady rise of stablecoins
Although Bitcoin is not the most competitive asset when it comes to smart contracts, there are some within it. These are characterized by the high level of security that the BTC network possesses. The creation and transfer of stablecoins is similarly in question here. Stablecoins also deserve it. Especially at a time when they are gaining in importance.