Developers unveil Taproot Assets protocol for Bitcoin mainnet

The Lightning Labs team has unveiled the alpha version of Taproot Assets v0.3 for Bitcoin’s mainnet. The solution enables the issuance and management of financial assets such as stablecoins on the Bitcoin blockchain.

Announcing the first mainnet release of Taproot Assets ?, a protocol for assets on #bitcoin and Lightning.

With this release, developers can issue financial assets on-chain in a scalable manner. ?

Today marks a new era of multi-asset bitcoin. ?https://t.co/2cNvZSvv8v

— Lightning Labs⚡️? (@lightning) October 18, 2023

According to the statement, the release provides direct compatibility — meaning there will be no critical changes to the protocol that could affect assets issued on the mainnet. The version supports on-chain Bitcoin functionality, and support for Lightning Network (LN) will be added by developers in the near term.

In September 2022, Lightning Labs launched the Taro protocol, which provided the ability to issue assets and use them in LN-based applications. The team announced the solution in April, and its creation became possible thanks to the activation of the Taproot upgrade in the Bitcoin network.

In May 2023, developers introduced a new version of the protocol — already under the name Taproot Assets v0.2.

According to the team, the mainnet release ‘marks the start of a new era for Bitcoin’.

“With Taproot Assets v0.3, developers have all the tools they need to turn Bitcoin into a multi-asset network, but with scalability […]. We believe that in this new era, Taproot assets will see many world currencies issued, and their global transactions will be instant through LN,” the Lightning Labs said.

Bitcoinisation of the dollar and global financial assets

Following El Salvador’s legalisation of Bitcoin as legal tender in 2021, the LN community has experienced explosive growth, particularly in developing markets, the team notes. One of the main requests from projects serving these users has been tools to add stablecoin support to their apps.

In the view of Lightning Labs, nothing is surprising: the importance of such assets in the financial system is underscored by the fact that their issuers hold a larger volume of U.S. government bonds than countries such as Germany and South Korea.

User demand for ‘stablecoins’ exists because they are simply a better product than local currencies in developing countries, the developers emphasised. Moreover, more than 2 billion people worldwide live in environments with double-digit inflation in their national currencies, they note.

“We believe that Taproot Assets, delivering stablecoins to Bitcoin wallets, will only accelerate the provision of cryptocurrency to these billions of people,” the team said.

During testing, developers experimented with real-world assets such as gold, U.S. Treasuries and corporate bonds. Together with early users they implemented around 2,000 cases, for which they synchronised nodes with the Universe server to initialise and verify state more than 420,000 times.

Lightning Labs stressed that Taproot Assets v0.3 ‘provides a full toolkit for issuing, managing and exploring on-chain mainnet assets’.

The release includes:

• APIs for issuance and redemption, with support for issuing multiple tranches at different times, preserving fungibility;
• asynchronous messaging functionality, allowing sending and receiving messages without both parties being online at the same time;
• ‘multiverse’ mode for Universe, joining several servers — if one goes offline, the recipient has other sources to verify the sender’s legitimacy;
• improvements to scalability, security and developer convenience, such as solutions enabling self-run stress tests of software, ensuring protection against possible mainnet reorganisations.

The Taproot Assets team noted that the mainnet protocol is in alpha, and therefore expects feedback, comments and further user participation in refining the solution.

Many members of the community with enthusiasm welcomed the mainnet release from Lightning Labs. However, a Bitcoin developer using the handle Hunter Beast said the solution is “a poor imitation of the RGB protocol”, which has been on mainnet for months.

Good for you. Meanwhile, RGB has been on mainnet for months, works with cold wallets instead of being on hackable hot nodes, can do smart contracts, not just assets, and you have no plans to scale beyond Lightning. Taproot Assets will always remain a poor imitator of RGB.

— Hunter ₿eaṩt (@cryptoquick) October 18, 2023

In 2018, founder and CEO of BHBnetwork Giacomo Zucco told ForkLog about the RGB concept — a layer atop the Bitcoin blockchain that enables creating different classes of financial instruments.

In May 2023, Digital Bitcoin Art and Assets launched NFT marketplace based on RGB smart contracts.