The evolution of the Lightning Network aims to achieve greater functionality and flexibility within the Bitcoin network, allowing for a wider range of possibilities for the development of financial applications and services that could benefit users around the world.
Lightning Network has tested its first stablecoin transaction on the Bitcoin network. It has done so through the protocol Taproot Assets, powered by Bitcoin’s Taproot upgrade, which allows developers the ability to issue, manage, and explore stablecoins or other digital assets on the most robust blockchain on the market.
Lightning Network CEO Elizabeth Stark said at the Crypto and Digital Assets Summit earlier this month that Bitcoin's scalability layer had tested a successful stablecoin transaction on Bitcoin, using a digital asset built with Taproot Assets.
This protocol makes it easy for developers to create tokens that can be transferred within the Bitcoin blockchain and eventually across the Lightning Network. Through Taproot Assets, Lightning promises instant, high-volume, low-fee multi-asset transactions in Bitcoin, which could revolutionize the way digital assets are handled, expanding global financial access through cryptocurrencies.
With this development, the Lightning Network is taking a significant step in the evolution of the Bitcoin network.
Stablecoins are coming to the Bitcoin network
Bitcoin has been seen as a less functional blockchain than other existing ones, such as Ethereum, which enables the creation and development of new digital assets and decentralized applications (DApps) thanks to the execution of smart contracts. However, although it has been considered for years only as a robust store of value, innovation in the world of cryptocurrencies is an unavoidable commitment, which allows the industry in general to advance with giant steps in the field of innovation.
In this sense, Bitcoin has achieved new use cases such as the arrival of protocols with Ordinals and, now, with Taproot Assets it is providing a new way to revolutionize the way we interact with digital currencies.
Taproot Assets was introduced last year as a protocol that allows for the issuance of multiple assets, including stablecoins, directly on the Bitcoin blockchain. Most notably, these digital assets can be transferred over the Lightning Network, meaning instant, high-volume, low-fee transactions on the network.
According to Stark, Taproot Assets aims to create “cryptocurrencies and stablecoins” on Bitcoin, which could be particularly relevant for emerging markets, where the integration of stablecoins on the Lightning Network could expand financial access for their communities. This development is also critical to increasing Bitcoin’s utility and presence in the decentralized finance (DeFi) ecosystem.
On the other hand, Ryan Gentry, director of business development at Lightning Labs, emphasized that the development of Taproot Assets marks the beginning of a new era for Bitcoin, highlighting that the protocol provides developers with all the necessary tools to create new assets that can be transferred in a scalable way, with the security of the network.
“We believe this new era for Bitcoin will see a myriad of global currencies issued as Taproot assets, and the world’s currency transactions settled instantly via the Lightning Network,” Gentry said.
In a publication In an October announcement, Gentry noted that Taproot Assets will make Bitcoin the global routing network for the Internet of Money. “This is how we bitcoinize the dollar and the world’s financial assets”He stressed.
