Original Title: "Taproot Assets can help usher in the 'Bitcoin Renaissance,' says Lightning Labs co-founder"

Original Author: James Hunt, The Block

Original Translation: Kaori, BlockBeats

Lightning Labs CEO and co-founder Elizabeth Stark said in an interview with The Block that Taproot Assets will help lead the "Bitcoin Renaissance," making Lightning Network a multi-asset network and further solidifying Bitcoin's position in the "currency internet" field.

On Wednesday, Taproot Assets v0.3 was released on the mainnet alpha version, paving the way for stablecoin and other asset issuance on Bitcoin. According to Lightning Labs, the current release version supports on-chain functionality, with Lightning Network support coming soon.

This idea is to transform Bitcoin into a scalable multi-asset network without affecting its core principles. Stark states: "Since its release, we have been surprised by the level of developer activity, with over 15,000 different assets already minted on the mainnet." "Minting can create a single asset or batches of similar assets. For example, a mint can issue a specific asset with a supply of 21 million."

Regarding the expected timeline for Lightning Network support, Stark added: "Providing an exact timeline for protocol development is always challenging, but the team has expressed that they are working hard to push it out to the world as soon as possible." "We recently released version 0.17 of our LND (Lightning Network implementation), which includes Taproot channel support, an important prerequisite for Taproot Assets on the Lightning Network."

As the next halving approaches, it is time to accelerate the development of Bitcoin. "The protocol only requires the issuer to make one Bitcoin transaction to mint an effectively unlimited amount of Taproot Assets, with all metadata describing these assets stored off-chain and only password commitments to the assets stored on-chain," Gentry told The Block.

"Unlike other protocols that store data directly on the blockchain, this design makes asset minting and trading very efficient on-chain. Although this version supports the mainnet, alpha means we hope the community will test for potential errors," Gentry wrote in the announcement. The Lightning Network is a bi-directional payment channel network built on top of the Bitcoin blockchain, aimed at achieving fast and low-cost microtransactions."

Why have stablecoins attracted so much attention?

The rise of stablecoins cannot be ignored. According to The Block's data dashboard, the total supply of stablecoins has exceeded $122 billion.

Lightning Labs stated that the demand for stablecoins from users is "overwhelming", and stablecoin issuers hold more US Treasury bonds than major developed countries such as Germany and South Korea. In addition, countries such as El Salvador have already accepted Bitcoin as legal tender.

The digital properties and self-custody potential of stablecoins make them easier to acquire, increasing their global utility. Gentry believes that stablecoins' relatively stable prices compared to inflationary local currencies also make them attractive to billions of people. He also stated that Taproot Assets introducing stablecoins to Bitcoin wallets will only accelerate this process. Ethereum and Tron networks currently dominate stablecoin demand, mainly due to their low cost and fast transactions.

However, Taproot Assets, as a stablecoin protocol, has two main advantages: "it will integrate with the Lightning Network to provide stablecoin users with instant settlement and low transaction fees, and it will settle on the Bitcoin blockchain, which is currently the safest and most reliable blockchain," Gentry told The Block. He also said, "We have always heard developers say that if they could provide stablecoins to end users on the Bitcoin and Lightning Network infrastructure, they would do so, so we expect adoption to be very fast."

Our focus is on financial assets, especially stablecoins, because that is the biggest demand we hear from our users and community," added Stark. "Many emerging market populations living in inflationary environments are looking for low-fee, stable USD value trading options, or they face high fees and an unstable financial system.

With the emergence of AI agents and our native payment verification protocol L402, we have also seen a growing demand for USD machine-to-machine payments. "RGB (a smart contract system and off-chain protocol for Bitcoin and Lightning Network) represents the best opportunity to issue USDT on Bitcoin" according to Paolo Ardoino, CTO of Bitfinex, who is also a fan of Taproot Assets, calling it "the future we deserve".

Lightning-fast foreign exchange and RWA

With the other use cases brought about by this release, Lightning Labs envisions a future where global currencies are issued as TaprootAssets and foreign exchange transactions are settled instantly through Lightning Network implementation.

Gentry pointed out that this Taproot Assets lightning transaction will utilize existing Bitcoin liquidity, allowing lightning nodes to forward Taproot Assets transactions without their knowledge, thereby enhancing the network effect of Bitcoin and creating a global routing network for internet currency.

In addition, Gentry stated that developers are also experimenting with real-world assets such as gold, US Treasury bonds, and corporate bonds. Stark added that "the ability to issue real-world assets on Bitcoin will also be unlocked through the Taproot Assets protocol, such as issuing debt instruments." "We expect there to be a significant demand to issue various financial assets on the safest and most valuable blockchain, which is Bitcoin."

「inability to clone roasbeef」

With the release of Taproot Assets v0.3, developers now have tools to issue, manage, and explore mainnet assets on-chain, the team said. The asset issuance API has been improved and supports layered issuance to ensure substitutability between assets minted at different times.

Taproot Assets v0.3 allows users to send and receive assets when both parties are not online at the same time. The new "Multiverse" mode enables the "Universe" server - the repository that stores all the information needed for Taproot Assets - to support and track multiple assets, ensuring data reliability even if a server goes offline. In addition, the forward compatibility of Taproot Assets ensures that assets issued today will still function in potential future enhancements.

The team stated that significant improvements need to be made in terms of security, scalability, and developer experience for the development of the mainnet alpha, including performance testing tools and advanced security measures.

Gentry said in an interview with The Block: "Our team has accumulated rich experience in building LND (Lightning Network implementation). They fully utilized these experiences when designing Taproot Assets, minimizing the protocol's on-chain footprint to achieve maximum scalability for users, just like Lightning Network." Stark added: "Ultimately, our biggest challenge is the inability to clone roasbeef (Laolu Osuntokun, Lightning Labs' CTO and creator of the protocol)."

What will happen next?

The ultimate goal is very clear: to develop Lightning Network into a multi-asset network. After releasing Taproot Assets, Lightning Labs will now focus on this. Gentry pointed out: "Once we complete the payment channel function of the protocol, users will be able to send and receive the currency of their choice on the Lightning Network, using existing Bitcoin liquidity as a global routing currency and exchange medium."

Before the mainnet launch, nearly 2000 assets were minted on the testnet, exploring the potential of stablecoins, collectibles, and real-world assets. Projects like Joltz Rewards, Nostr Assets, Royllo, Deezy, Speed, DFX Swiss, and Tiramisu Wallet are currently building the Taproot Assets infrastructure, including web and mobile wallets, open-source software development toolkits, asset explorers, developer tools, and Nostr integration.

Lightning Labs released the initial Taro protocol code in September 2022 as part of its goal to "bitcoinize the US dollar." However, Taro's name was changed to Taproot Assets after blockchain startup Tari Labs won a temporary restraining order against the company, alleging that the Taro name was similar to its own trademark and provided similar services. In addition, Lightning Labs also released a new set of tools designed specifically for AI development in July.

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