Lightning Labs unveils protocol to issue stablecoins on the Lightning Network

The Lightning Labs team closed a $70 million Series B funding round. The proceeds will go toward developing the Taro protocol, which enables issuing assets, including stablecoins, on the Bitcoin network and using them in Lightning Network applications.

Today we’re announcing Taro, a new protocol to issue assets on Bitcoin and Lightning, and our $70M Series B fundraise! 🍠

One small step for bringing bitcoin to billions. 🌍

One giant leap for powering the world’s financial system with #bitcoin. 💱https://t.co/dpzdrwDMTZ

— Lightning Labs⚡️🍠 (@lightning) April 5, 2022

Taro is infrastructure that enables creating a wide range of assets, including stablecoins, and moving them on the Lightning Network. The creation of the protocol became possible after activation of the Taproot upgrade in November 2021.

Taro aims at the “Bitcoinization of the dollar,” using the security and stability of the Bitcoin blockchain, as well as the speed, scalability and low fees of the Lightning Network.

The technology could be particularly in demand in developing markets facing high inflation — requiring only mobile internet access instead of a bank account. Taro could cement Bitcoin’s status as the “money of the internet” and a protocol for transferring value, Lightning Labs believes.

“When it comes to the Lightning component, you route the payments through Bitcoin. You literally convert “dollars” into bitcoins and back,” said The Block Elizabeth Stark, co-founder and CEO of Lightning Labs.

By “dollars” she means USD-backed stablecoins. The executive aims to increase the share of stablecoins in everyday payments, “driving Bitcoin to billions.” According to Stark, some “major players” have shown interest in issuing stablecoins via Taro.

More details on how the algorithm works can be found on the Lightning Labs page.

The developers published the protocol code in open source form for integration into other Lightning Network implementations from Blockstream and others.

The investment round was led by Valor Equity Partners and Baillie Gifford. Other participants included Goldcrest Capital, Kingsway, Moore Strategic Ventures, Brevan Howard, Robinhood CEO Vlad Tenev, head of NYDIG and Silvergate Alan Lane.

Earlier in November 2021, NYDIG acquired the BottlePay Bitcoin payments service built on the Lightning Network.

Earlier, the app team raised $15.5 million in a seed round with participation from Alan Howard and partners from Goldman Sachs and NYDIG.

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