Lightning Labs raises $70M to bring stablecoins to Bitcoin

A new Taproot-enabled protocol called Taproot Asset Representation Overlay (or Taro) is giving Bitcoin a boost. root vegetable it is not the playing cards. Taro is an open-source protocol powered by the Lightning Network (LN).

Tuesday Elizabeth Stark co-founder and CEO Lightning LabsTaro announced Taro’s bid to add assets to the Bitcoin blockchain, such as stablecoins.

Lightning Labs, in addition to Taro, announced $70,000,000 in Series B financing. This was led by Valor Equity Partners. Baillie, global asset manager, joined the company.

Stark said Taro improves Bitcoin’s functionality and is possible because of Taproot, an upgrade that was activated last year. Taproot had three upgrades: Schnorr Signatures, Tapscript, and Merkelized Abstract Syntax trees (MAST). Taproot offers Bitcoin flexibility, efficiency, privacy, and privacy gains, but developers must integrate it into their tools. Taproot can make Taro a reality if it is used properly.

Lightning Labs Director, Business Development, spoke with CoinDesk. Ryan Gentry said the protocol is “uniquely enabled by Taproot to embed spending conditions into MASTs without disclosing all details to the blockchain. Using MASTs, Taro embeds data for new assets such that these assets can all be treated as bitcoins.”

How it works

Lightning Labs refers to Taro as an asset network that overlays Bitcoin. Taro’s security is built on embedded consensus. This means transactions on Taro contain Bitcoin data that must be verified on Bitcoin blockchain.

Additional rules govern the data, as specified by Taro protocol. This is similar to LN which uses Bitcoin smart contracts but has its very own set of rules that allow instantaneous bitcoin transfer (BTC).

These are rules that the Bitcoin blockchain doesn’t necessarily care about. On that point specifically, Stark mentioned in the same CoinDesk interview that “you issue [the asset] on-chain and then you bring complexity to the end points,” the end point being the Taro protocol.

Lightning Labs are the most important thing. released the technical specifications for Taro as a Bitcoin Improvement Proposal (BIP) so that the protocol can be built with feedback from the broader developer community.

Taro may be available on the first day. lnd, Lightning Labs’ implementation of LN, its status as an open-source protocol will allow other popular LN implementations, like ACINQ’s eclair or Blockstream’s Core Lightning, to use Taro. During the interview, Stark pointed to this as a critical aspect of Taro. When Lightning Labs announced its Series A in 2020, she wrote that we were “entering the decade of Lightning.” Two years into that decade, she said Lightning Labs remains committed to being open source.

A critical distinction between Taro and other stablecoins, like UST on Terra, is that Taro is only the infrastructure to enable the movement of assets over Lightning, be they stablecoinsOr some other asset. Taro isn’t a stablecoin that is collateralized, algorithmic, or otherwise. It is only infrastructure that allows for the movement of assets. Taro can still be used by developers for building projects.

Major funding

Stark answered a question about the $70 million Series B announcement in conjunction with Taro and said that the combination approach was deliberate.

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

The funds will be used to bolster Lightning Lab’s runway flexibility and act as fuel to grow the company, she said. Lightning Labs has 24 employees, but it is still a small business. team page.

The round included Valor Equity, Baillie Gifford and Goldcrest Capital. Goldcrest Capital and Kingsway, Moore Strategic Ventures and Brevan Howard were also part of the financing round. NYDIG CEO Alan Lane and Robinhood CEO Vlad Tenev were also present.

Baillie Gifford, a traditional finance company with a long operating history, being in the investor group marks another entry into investing in crypto infrastructure after it invested in Blockstream and Stark mentioned that the asset manager is a “long-term-oriented investor, so they’re really a perfect fit for what we are trying to accomplish.”

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