Author: Olaoluwa Osuntokun 2023-09-06 19:27:48+00:00
Published on: 2023-09-06T19:27:48+00:00
A programmer has published a draft bLIP (Bitcoin Lightning Improvement Proposal) that describes how to map the Taproot Asset Protocol onto the existing BOLT channel/invoice format. The bLIP builds on the proposal for simple taproot channels and introduces support for holding and transferring assets created by the Taproot Assets Protocol. The Taproot Assets are represented as an extra tapscript sibling placed in the tapscript tee of relevant outputs within the taproot channel format.To enable multi-hop payments using Taproot Assets edge liquidity, an RFQ (Request For Quote) last-mile negotiation scheme is used. Liquidity providers lock in an exchange rate for both incoming and outgoing payments through tendered quotes identified by a cryptographic hash and scid-like sequence number. These quotes expire ephemerally to reduce exchange rate risk. The existing BOLT 11 invoice format is used without modification, allowing a receiver to accept a taproot asset without requiring the sender to have up-to-date knowledge of exchange rates. Support for BOLT 12 invoices is readily available as no changes to the invoice schemes are needed.The RFQ system and invoicing setup ensure that a sender can be completely unaware of the nature of the asset requested by the receiver. All invoices are denominated in BTC, and assets can be crossed into BTC or vice versa at the edges. Additionally, the sender can use any asset or BTC to pay any valid invoice. As the accepted quotes expire, so do the invoices. In the future, the RFQ system may be extended to include prepayments, options, and other techniques to manage exchange rate exposure.To fully understand the specification, a solid understanding of the set of BIPs (Bitcoin Improvement Proposals) is necessary. However, most active Lightning Network developers should be able to focus on the latter section of the specification, which explains the new last-hop TLV (Type-Length-Value) payload, the `rfq-scid` identifier, and how to carry out and receive payments involving assets at either edge.The programmer is open to feedback and suggestions to further improve the protocol. The release of version 0.3 of `tapd`, a software implementation of the Taproot Asset Protocol, is approaching, which marks a major milestone towards the mainnet release of the protocol. With the upcoming release of lnd v0.17 (including an experimental version of taproot channels) and tapd v0.3, users will be able to send and receive assets at the edges of the Lightning Network, leveraging the Bitcoin Backbone of the network.
Updated on: 2023-09-07T01:56:09.146815+00:00