RGB And Taro, Both Putting Tokens On Bitcoin, Take Two Different Approaches To Development

2 months ago 25

RGB and Taro, 2 protocols susceptible of putting tokens similar stablecoins connected Bitcoin, person taken antithetic approaches to solving akin problems.

This is an sentiment editorial by Kishin Kato, the laminitis of Trustless Services K.K., a Japanese Lightning Network probe and improvement company.

Demand for stablecoins connected Bitcoin is returning arsenic the Lightning Network offers monolithic scalability advantages. Currently, users successful emerging markets who privation to transact and prevention successful USD volition settee for stablecoins connected different chains, according to proponents. Putting my idiosyncratic feelings astir these different blockchains aside, I indispensable admit that bitcoin received successful cheap, cross-border remittances cannot easy beryllium sold for dollars portion they reside successful non-custodial Lightning channels.

RGB and Taro are 2 caller protocols that alteration token issuance connected Bitcoin, and are truthful expected to bring stablecoin transactions connected Lightning. I studied these protocols and the client-side validation paradigm that they employment and published a study connected my findings called “Emergence Of Token Layers On Bitcoin” done Diamond Hands, a large Japanese Lightning Network idiosyncratic and developer assemblage and Bitcoin-focused solution provider.

During this research, I noticed subtle differences successful however these seemingly-similar protocols were being developed, and became funny successful however these differences whitethorn impact their trajectories. In this article, I would similar to stock my impressions of these projects and however they whitethorn impact Lightning arsenic we cognize it.


Priorities And Mindset, Revealed Through Protocol Development

Protocol improvement is not easy, and often takes years. Deciding what features to prioritize and compromise connected is critical, and 1 of the superior differentiators betwixt RGB and Taro is the decisions they person made successful that regard.

RGB, with its ambitions arsenic a smart-contracting furniture connected apical of Bitcoin (i.e., not conscionable for tokens), has a robust on-chain protocol to execute off-chain authorities transitions. Careful plan has resulted successful superior privacy, on-chain scalability and versatility, astatine the outgo of conceptual complexity. On the different hand, Taro seems to beryllium much focused connected off-chain use, specified arsenic connected the Lightning Network, specifying methods for multi-hop payments and token exchange. However, among the applicable shortcuts Taro has taken successful favour of conceptual simplicity is its neglect to standardize astatine slightest 1 basal gathering artifact of its on-chain protocol.


Since Taro assets are stored utilizing an on-chain UTXO, Taro transactions tin theoretically beryllium constructed successful 2 ways: 1 wherever the sender pays bitcoin for the recipient’s output, and the different wherever the recipient contributes their ain input to wage for it themselves. The erstwhile lawsuit is simpler, but the sender is efficaciously gifting immoderate bitcoin; the second tin beryllium much precise, but requires sender-recipient enactment to make the transaction. Unless these methods and their enactment are standardized, wallet interoperability is simply a tube dream.

Perhaps Taro’s reluctance to standardize specified a basal constituent tin beryllium explained by its attack to development. Overall, portion RGB is being developed rather transparently, Lightning Labs seems to reserve much power implicit its task successful Taro, perchance to instrumentality a much iterative, feedback-based attack to bringing its merchandise to market.

Indeed, erstwhile a protocol is wide adopted it is hard to update oregon regenerate without breaking interoperability. However, this is not needfully the lawsuit if your implementation is the lone one. Lightning Labs whitethorn beryllium reserving its quality to rapidly iterate by intentionally postponing wide adoption of the protocol. I got this content from the aforementioned spread successful standardization, arsenic good arsenic the information that Lightning Labs plans to vessel its Taro wallet with LND, its Lightning node implementation with more than 90% marketplace share.

It is surely imaginable that Lightning Labs’ attack volition beryllium much palmy astatine bringing tokens to Lightning. But unless it surrenders its ascendant relation astatine immoderate point, Taro risks becoming small much than an LND API. It is not unimaginable to maine that Taro volition stay an LND-specific feature.

Will Lightning Survive Tokens?

As a semi-paranoid Bitcoiner, I indispensable wonderment if the proliferation of tokens connected Bitcoin volition effect successful antagonistic consequences for the Lightning Network oregon Bitcoin itself. While concerns of the second are validated by Circle’s (the issuer of USDC) ability to power users during immoderate imaginable contentious hard fork successful Ethereum, I would similar to constituent retired a circumstantial avenue of interest for Lightning.

As mentioned earlier, Taro’s attack if continued volition effect successful the accrued inferior of LND done usage of its included Taro wallet, successful narration to different implementations. This tin perchance further fastener successful LND’s ascendant presumption successful the node implementation landscape. To support Lightning decentralized, it is preferable that users are dispersed much evenly crossed aggregate implementations, truthful that adjacent the astir fashionable implementation cannot simply instrumentality protocol changes without effect to its users.


While I personally americium not a instrumentality of the immense bulk of crypto tokens, I bash judge that the Lightning Network has thing to prospectively connection users of specified tokens: fast, backstage and decentralized speech and payments. Being capable to wage idiosyncratic successful their section oregon preferred currency instantly, without the sender owning immoderate of it, has immense imaginable to disrupt existing outgo and remittance rails. Though it is unclear what protocol volition prevail for token issuance connected Bitcoin, I anticipation that proliferation of tokens volition not sacrifice the things that bitcoin and Lightning basal for.

This is simply a impermanent station by Kishin Kato. Opinions expressed are wholly their ain and bash not needfully bespeak those of BTC Inc oregon Bitcoin Magazine.

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