Exploring the integration of Taproot Assets and Lightning Network and its significance

Author: Ben77 Source: X, @blapta

The combination of Taproot Assets and Lightning Network has been officially launched, which is a highly anticipated new capability. Many people think that this will make the Lightning Network have an ecosystem similar to Ethereum, but this perception is a misunderstanding. As one of the contributors to Taproot Assets, I often discuss related designs with the author roasbeef. Today, I will introduce some important knowledge points about Taproot Assets.

1. Can Taproot Assets only be used for transfers?

In theory, yes. The state tree of Taproot Assets is a sparse Merkle tree that is only related to the amount and bound by a single asset. If the ability of smart contracts is required, in theory, it has no additional state verification mechanism available. This state tree design is adopted so that when users transfer money, they only need to pay attention to the changes in their own related tree branches.

2. Can Taproot Assets be exchanged on the Bitcoin mainnet?

The biggest difference between Taproot Assets and Runes, BRC20, etc. is that its asset verification is handled by the TAPD client, and its VPSBT is an off-chain transfer rule. In other words, the asset ownership of Taproot Assets is not achieved through the transfer of UTXO ownership of its Anchor. Currently, the DEX based on Bitcoin-level PSBT on the market cannot directly access Taproot Assets.

3. Taproot Assets is more secure than other Bitcoin assets

Taproot Assets has a significant advantage in security. The transfer verification of assets can be performed by users themselves without relying entirely on a unilateral indexer. Users can choose to join multiple universes for synchronization and verify through the data synchronized by these universes.

4. What is the biggest use case of Taproot Assets combined with Lightning?

The biggest use case of Taproot Assets combined with Lightning is stablecoin payments in real life, not asset speculation and trading. All channel technologies are based on liquidity lock-in, that is, users and counterparties must have the same assets to lock up at the beginning. Therefore, NFT assets cannot circulate in the channel because users and counterparties cannot own the same NFT assets.

5. How can ordinary users access Taproot Assets?

All users need to have their own TAPD node. Since TAPD does not have a local private key and is ultimately controlled by LN, users need to have both TAPD and LND nodes. This requires a specially customized non-custodial wallet to help users build it. Since client-verified assets are used, if the client is not in the hands of the user, it is meaningless, and such an approach is just selling dog meat under the guise of sheep.

Through the above introduction to Taproot Assets, I hope it can help everyone better understand its functions and potential. As an emerging technology, its practical application is still under exploration, but its design concept and security provide a solid foundation for its future development.