- Lightning Labs is developing a protocol that will enable stablecoins on Bitcoin.
- CEO Elizabeth Stark believes this will solve the issues of high transaction fees and other problems faced by stablecoins on current blockchains.
- Stark also highlighted the growing adoption of stablecoins, particularly in emerging markets and nations dealing with hyperinflation.
Lightning Labs is paving the way for stablecoins on Bitcoin, with CEO Elizabeth Stark announcing significant progress towards this goal. The development could revolutionize the use of stablecoins, offering instant, high-volume, low-fee transactions.
Lightning Network Taproot Assets Protocol
Lightning Labs’ Taproot Assets protocol is building functionality for issuing assets on Bitcoin that can be transferred over the Lightning Network. This builds upon the foundation laid by the 2021 Lightning network Taproot upgrade which expanded Bitcoin’s smart contract and scripting capabilities. The protocol will facilitate the use of stablecoins on the Bitcoin network, allowing them to take advantage of the functionality that the Taproot Asset protocol offers.
Stablecoins on Bitcoin: A Solution to High Transaction Fees
Stark argued that stablecoins suffer on current blockchains due to high transaction fees and other issues. She cited Bitcoin’s network as the best blockchain to facilitate stablecoins because it “is the most secure and decentralized.”
Increasing Adoption of Bitcoin and Stablecoins
Stark highlighted the growing adoption of stablecoins since the COVID-19 pandemic, particularly in emerging markets and nations grappling with hyperinflation and devaluing fiat currencies. She explained that these users are looking for a stable store of value, and in some cases, they’re using Bitcoin, stablecoins, or a combination of both.
Lightning Labs: Building the Infrastructure for Stablecoin Issuance
Stark claims there is a need for the infrastructure to enable the issuance of stablecoins and real-world assets on the Bitcoin blockchain. She explained that Lightning Labs is not issuing assets, but building the rails for asset issuers to use their technology to issue real-world tokenized assets. The applications of this infrastructure could enable financial institutions to issue gold assets, stablecoins and other fiat-backed assets on Bitcoin.
Conclusion
With the development of the Lightning Network Taproot Assets protocol, Lightning Labs is paving the way for the use of stablecoins on Bitcoin. This could revolutionize the use of stablecoins, offering instant, high-volume, low-fee transactions and solving the issues of high transaction fees and other problems faced by stablecoins on current blockchains. The development also highlights the growing adoption of stablecoins, particularly in emerging markets and nations dealing with hyperinflation.
