Lightning Labs teases protocol for minting RWAs, stablecoins on Bitcoin

Are stablecoins and other real-world assets coming to Bitcoin? A new release from Lightning Labs may enable just that. 

Lightning Network developers Lightning Labs announced on Wednesday the “mainnet alpha” release of Taproot Assets, a protocol for minting non-native assets to Bitcoin, and eventually to the Lightning Network. 

In a blog post from Lightning Labs, business development director Ryan Gentry wrote that developers now have “the complete set of tools to start issuing, managing and exploring mainnet assets on-chain.”

The blog post emphasized stablecoins in particular as a promising design space, pointing to recent research that shows stablecoin projects are, in aggregate, now among the largest holders of US Treasurys in the world. 

Additionally, the blog cited a recent Blockworks article, noting that stablecoins are an ideal alternative to local currencies in emerging economies. 

“Over 2 billion people live under double or triple digit inflation in their local currencies, making a stablecoin’s price stability relative to the dollar even more attractive. We believe that Taproot Assets bringing stablecoins to bitcoin wallets will only accelerate the process of bringing bitcoin (BTC) to those billions of people,” he wrote. 

Developers have reportedly begun experimenting with “gold, US Treasurys, corporate bonds with programmatic coupon payments and more.”

The launch of the protocol comes amid a surge of activity in Bitcoin development. The 2021 “Taproot” upgrade to the network — the first since 2017 — significantly expanded the theoretical capabilities of the chain from a development perspective. 

Since then, native NFTs from developer Casey Rodamor – also referred to as Ordinals – have led to a surge in transactions and interest in Bitcoin blockspace. 

Likewise, in October a research paper proposed “BitVM,” a protocol that would leverage Taproot to enable the creation of a zero-knowledge light client for Bitcoin that would theoretically be Turing complete. 

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