Lightning Labs is building an infrastructure that would allow users to send money around the world almost instantly and at low cost through the Bitcoin network.
The company has just raised funds to support a protocol it built called Taro, which would allow stablecoins to be transferred over Bitcoin’s Lightning Network, Decrypt first reported.
Taro is the latest of many products that 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 funding round with participation from Baillie Gifford, Robinhood CEO Vlad Tenev, Goldcrest Capital and others, according to Decipher. The product will be used to enable stable transactions based on the Taro protocol, made possible by Bitcoin’s Taproot upgrade in November 2021.
Lightning Labs raised $10 million from its Series A last September following its $2.5 million seed round in 2018, bringing its total raised to $82.5 million, including new capital. The company has fewer than 30 employees today, Lightning Labs co-founder and CEO Elizabeth Stark told TechCrunch.
The Bitcoin Layer 1 network itself supports about five transactions per second, according to crypto exchange Binance. Taro will help developers move assets over the Bitcoin Lightning Network by executing hundreds of thousands of transactions per second, a volume far beyond what the Bitcoin network could otherwise support, Stark said.
Stark explained the significance of the new protocol, saying it will allow people without bank accounts to send and receive money in the form of stablecoins representing their national fiat currency through mobile apps. While Lightning Labs will not issue stablecoins directly, Taro will provide the infrastructure and rails for stablecoin transfers to take place.
“If I were Visa, I would be scared, because there are a lot of people who have cell phones, but no longer need to use the traditional system, and merchants do not need to pay the 3 % fee plus 30 cents [for a transaction]. You can have significantly lower fees than the legacy system,” Stark said.
Stark added that Lightning Labs has already begun seeking feedback from the developer community on its proposal for Taro and plans to incorporate that feedback as it develops the protocol.