Taproot Taro Protocol Will Bring Low-Fee Stablecoins To Bitcoin

Taproot Taro protocol will bring low-fee stablecoins to Bitcoin and faster asset transfers to the Bitcoin lightning network as we can see more today in our latest Bitcoin news.

Bitcoin is getting a boost thanks to the new Taproot-enabled protocol dubbed Taproot Asset Representation Overlay, TARO, which is an open-source protocol powered by the Lightning Network. The co-founder of Lightning Labs Elizabeth Stark announced that Taro aims to bring assets like stable coins to the Bitcoin blockchain. In addition to Taro, the LN also announced that it raised $70 million in funding that was led by Valor Equity Partners and Baillie Gifford.

Stark said that the Taproot Taro protocol will improve Bitcoin’s functionality because of the three updates: Tapescript, Schnorr signatures, and Merkelized Abstract Syntax Trees. Taproot provides privacy, flexibility, and efficiency to BTC but only if it is built into the tools for users by developers. Taro represents what could become possible when Taproot is put into work. LN Director of Business Development Ryan Gentry said that the protocol is enabled by Taproot to be embed spending conditions into MASTs without disclosing more details. Using MASTs, taro can embed data for new assets and can be treated as BTCs.

Lightning Labs described Taro as an overlay network on BTC and the security of Taro is based on embedded consensus which means that the transactions on Taro include BTC data which needs to be verified on the blockchain. There are more rules to govern the data similar to how the LN is an overlay network that uses BTC smart contracts but has a new set of rules to enable the transfer of bitcoins. There are rules that the BTC blockchain doesn’t really care about and Stark mentioned that you can issue the asset on-chain and bring the complexity to the endpoints which were the Taro protocol.

Lightning Labs released the specifications for Taro as a BTC Improvement Proposal so that the protocol can be built with feedback from the developer community. While Taro could become available first on IND, the status as an open-source protocol will allow other popular LN simple imitations. Stark also pointed to this as a critical aspect of Taro so when LN was announced in 2020, she wrote that we are entering the decade of Lighting and said that the labs remain committed to being open source.

The critical distinction between Taro and other stablecoins is that this one is going to enable the movement of assets over Lightning. Taro is not collateralized and alogirhtimic so it is simply an infrastrcuture to enable the movement of the assets and the developer’s still have to build projects using Taro. When asked about the $70M Series B announced in conjunction with Taro, Stark added:

“The goal of the announcement was to focus on the technology [Taro], raising money is solely the means, not the end.”