Lightning Labs on Wednesday released the first version of Taro open source software to enable minting, sending and receiving assets on the Bitcoin blockchain.
The alpha release of the Taro daemon allows developers to issue tokens to testnet, an alternative Bitcoin blockchain built specifically for public testing. It allows developers to test applications with testnet coins instead of real BTC with the added benefit of not exposing the real Bitcoin blockchain (mainnet) to any risk. Projects usually go live on the mainnet only after extensive testing and bug fixes.
Lightning Labs said in a statement that Lightning Network integration, a major Taro feature for instantly sending and receiving assets, will be enabled in a future development phase. The functionality requires Taproot channels to first be merged with the company’s lighting implementation (LND), which is currently a work in progress.
Meanwhile, the company said it is working to add “universe functionality” to the Taro daemon, which will allow users and asset issuers to provide proof of asset provenance and supply issuance, as well as interact more easily with asset data. Universes will be added to the daemon in the coming months, along with other improvements.
How Taro works
Announced in April, Taro leverages Taproot, the last major Bitcoin upgrade launched last year, to enable the issuance of assets in a private and secure manner without inflating the blockchain of Bitcoin. Lightning Labs’ proposal differs from most existing alternatives for the Bitcoin asset use case in that it does not require a separate blockchain or rely on adding additional data directly to the chain.
Under the hood, Taro contributes assets to Bitcoin through the “leaves” of the Taproot writing tree, as each leaf of the tree is completely independent and can be selectively revealed, allowing for structured commitment. By adding information about these assets (known as metadata) to the Taproot script’s sequence tree, the proposed protocol can function as a layer built on top of Bitcoin, allowing Taro asset transactions to look like regular transactions of Bitcoin as only Taproot’s output is revealed. on-chain –– while allowing evidence of asset movement on the transaction graph.
A Taro asset is issued via an on-chain Bitcoin transaction that includes the hash of some metadata (committed to) in a Taproot output. Taro assigns the asset to a private key held by the issuer and transmits the transaction to the network. The newly created Unspent Transaction Output (UTXO) then acts as a unique identifier for that asset, serving as a genesis point. Multiple asset mints can be made with a single Bitcoin transaction, and once Lightning integration is enabled, the technology will enjoy the instant transfers of the second layer network to send and receive assets cheaply and efficiently.
For more detailed information about Taro, see this explainerofficial documentation and BIPs.