Lightning Labs is building infrastructure that would enable users to send money across the world almost instantaneously and at a low cost through the Bitcoin network.
The company just raised funding to support a protocol it has built called Taro, which would allow stablecoins to be transferred on Bitcoin’s Lightning Network, Decrypt first reported.
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.
Valor Equity Partners led the $70 million Series B round with participation from Baillie Gifford, Robinhood CEO Vlad Tenev, Goldcrest Capital, and others, according to Decrypt. Proceeds will be used to enable stablecoin transactions based on the Taro protocol, made possible by Bitcoin’s Taproot upgrade in November 2021.
The company brought in $10 million from its Series A last September after its $2.5 million seed round in 2018, bringing its total raised to $82.5 million, including the fresh capital.
The Bitcoin layer-one network itself supports about five transactions per second, according to crypto exchange Binance. 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.
Stark explained the significance of the new protocol to Decrypt, saying that it 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.