Lightning Labs announced Tuesday that it is building infrastructure that would allow users to send money worldwide at a low cost and almost instantaneously through the Bitcoin network. Taro protocol, which will enable stablecoin transactions, is based on Bitcoin’s Taproot upgrade launched in November 2021.
According to Decrypt, the company raised $70 million in a Series B funding round to support a protocol called Taro, which would allow stablecoins to be transferred on Bitcoin’s Lightning Network. Valor Equity Partners led the round with participation from Baillie Gifford, Robinhood CEO Vlad Tenev, Goldcrest Capital, and others.
Proceeds will be used to enable stablecoin transactions based on the Taro protocol, made possible by Bitcoin’s Taproot upgrade in November 2021.
Taro is the latest of multiple products Lightning Labs has built specifically for the Lightning Network, which is a layer-two solution that makes the Bitcoin blockchain more efficient. Bitcoin’s Lightning Network is currently used by El Salvador, which recognizes the cryptocurrency as legal tender, and major companies and crypto exchanges such as Kraken.
According to Binance Academy, the Bitcoin layer-1 network itself supports about 5 transactions per second. Taro will support developers transferring assets on the Bitcoin Lightning Network by executing “hundreds of thousands of transactions per second,” a much greater volume than what the Bitcoin network could otherwise support, Lightning Labs CEO Elizabeth Stark told CNBC.
“With this technology, you could route all the world’s currencies through Bitcoin,” she said. “People will be able to seamlessly go between Bitcoin and say, a USD stablecoin, or peso, euro, yen, etc. And they can send those globally, instantly and with extremely low fees.”
Stark explained that the new protocol will allow individuals without bank accounts to send and receive money in the form of stablecoins that represent their domestic fiat currency through mobile applications. While Lightning Labs won’t be issuing the stablecoins directly, Taro will provide the infrastructure and rails for stablecoin transfers to take place.