Lightning Labs' CEO recently announced the development of cheaper, better stablecoins on Bitcoin.
Per this announcement, stablecoins might be launched on Bitcoin leveraging the Taproot upgrade.
This could address Bitcoin's scalability issues and high fees, and help more people get on board.
Stablecoins also are crucial for economies facing inflation and currency devaluation.
This comes amid the messy fight between Tether and Deutsche Bank over "transparency issues"
In recent developments, Elizabeth Stark, CEO of Lightning Labs, has just dropped a few hints about a massive leap forward on the Bitcoin network and its Layer 2 solutions.
Stark made this announcement at the recent FT Live’s Crypto and Digital Assets Summit.
And according to reports, just as we have seen things like NFTs and even fungible cryptos being deployed on the Bitcoin network, we might be set to see stablecoins tethered right on the Bitcoin network very soon.
Lightning Labs is one of the companies at the forefront of Bitcoin scalability research.
According to Stark’s announcement, the company is looking towards leveraging Bitcoin’s Taproot upgrade to launch stablecoins and even other tokenized assets on Bitcoin.
Leveraging the Taproot upgrade
This development is one of the most pivotal ones in the evolution of Bitcoin and is turning out to be just as significant as the announcement of the Ordinals protocol from 2203.
Soon, the days of high fees, scalability issues and other inefficiencies might be put to rest.
During the London interview, Stark also outlived the importance of stablecoins.
The Lightning Labs CEO emphasized that Stablecoins play a crucial role, particularly in economies that have been battered endlessly by inflation and devaluation of their currencies.
Keep in mind that since inefficiencies of fiat (most felt during the COVID-19 pandemic in 2022) came to light, there has been a marked increase in the number of users and the general adoption of stablecoins, especially in countries with these problems outlined by Stark.
Keep in mind that USDT and USDC combined, currently hold more than 140 billion in market cap of most small countries.
Stark highlighted the importance of establishing a robust Bitcoin infrastructure that supports this growth in the stablecoin market, as well as the deployment of other real-world assets on the Bitcoin blockchain.
Lightning Labs' aim isn't simply to create stablecoins, but to create a framework on top of the Bitcoin network that will allow asset issuers to bring not only stablecoins but a wider range of tokenized assets to life.
At the same time, Tether, the largest Stablecoin issuer in the world and Deutsche Bank have been at each other's throats this week, owing to a recent report from the latter, in which it cast doubt on the stability of stablecoins like USDT.
Stablecoins doomed to fail
Deutsche Bank in the report, drew parallels to the infamous “peso moment,”, suggesting that more than 85% of the stablecoins on the market are on the way to catastrophic failure.
Deutsche Bank argued that the lack of transparency from most stablecoin issuers could lead to a majority of these assets failing, and bringing the rest of the crypto market down with them.
Deutsche Bank also cited the situation in which Tether filed documents claiming that it holds over $110 billion in fiat-denominated reserves, despite the lack of a full audit.
However, Tether wasn’t having it.
The stablecoin issuer fired back, bashing the report and claiming that it lacked concrete evidence for its “transparency claims”.
Overall, the issue of the stablecoin market’s ability to survive is still under heated debate.
However, Lightning Labs' most recent advancements might serve to even the score, and give the stablecoin and asset tokenization markets a chance to thrive on the Bitcoin network.
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