Taro Protocol Programmable Lightning Network Assets
The Taro protocol introduces a way for developers to integrate multiple assets across networks using the Lightning Network. The service makes it easy for designers to leverage the security of Bitcoin while reducing fees and transfer times. Here's what makes the Taro protocol a game changer.
Transfer Stablecoins – Taro
The Taro system enables users to transfer stablecoins across networks using Bitcoin as the intermediary. The system leverages a new type of channel specially built for stablecoin transfers called an L-USD Channel. The channel ensures Bitcoin underpins all transactions which improves security and confidence in the system.
Bitcoin is the largest poW blockchain in the world and has operated successfully for 14 years. It has the most consumer confidence and enables developers to leverage these aspects of the project are sure to help drive interest.
The developers note that the system will improve remittance payments internationally. Remittance and other international money transfer methods are outdated. Taro provides another level of efficiency and traceability. Users can create digital assets with ease and all transactions get posted to the Bitcoin blockchain when the L-USD channel closes.
Fiat to Crypto On Ramp
The Taro protocol enables users to convert fiat into cryptocurrencies as well. This feature is a major plus as most people still use CEXs (centralized exchanges) to accomplish this task. Using a CEX is time-consuming, expensive, and requires a lot of personal information to be shared with a third party. As such, Taro provides a streamlined approach that will drive adoption.
The Taro system leverages the Taproot upgrade. The system uses a new data tree structure. This upgraded system supports more flexibility. For example, developers can embed arbitrary asset metadata within an existing output. The upgrade enables users to create stablecoins and other digital assets using Bitcoin. Taproot went live in November 2021.
The upgrade altered the way that scripts controlling coins are contained within a tree structure. The new setup supports private access to scripts. The main advantage is that developers can now create more complicated scripts. These scripts can be made at a lower cost than submitting data to the blockchain using the traditional keySpend path. Developers can use this service to attach verifiable data to transactions without revealing the data to other blockchain users as well.
The system provides high performance and low fees to the community. Specifically, the technique integrates support for multi-hop transactions which cuts transaction processing time down. Additionally, the upgrade improves the network's audibility which will enable developers to create more complex assets like stablecoins that must remain regulatory compliant.
According to company documentation, the use of a Sparse-Merkle Tree enables the private retrieval of transaction data and validation services. Uniquely, the channel supports both Lightning Network transfers or directly sending assets on Bitcoin's mainnet.
Taro – Lighting Network Powered Stablecoins are on the Way
Protocols like Taro continue to demonstrate the resilience and overall flexibility of the Lightning Network. Developers are sure to leverage these tools to improve onboarding and support for stablecoins within their Dapps. As such, Taro is positioned to see growth in the coming months.