Bitcoin software company Lightning Labs has secured a major funding round that will allow it to further develop the Lightning Network for faster and cheaper transactions in bitcoin and stablecoins.
The $70 million Series B round was led by Valor Equity Partners, with participation from Baillie Gifford, Goldcrest Capital and several other angel investors. Lightning Labs builds additional functionality and software for Bitcoin's second-layer transaction solution, the Lightning Network (LN).
The funds will reportedly be used for a new protocol it has developed called Taro, which will enable stablecoins to be transferred using LN. Lightning Labs will not issue stablecoins, but the infrastructure will allow them to be sent across the network.
Stablecoin transactions are made possible by the November 2021 Bitcoin Taproot upgrade, which also introduces smart contract functionality.
Lightning Labs believes that Taro will further boost bitcoin adoption, as it could potentially allow the unbanked in developing countries to use the stablecoin to send remittances.
Elizabeth Stark, CEO and co-founder of Lightning Labs, said in an interview with Forbes: "It's really important because potentially all the currencies in the world can move Bitcoin through the Lightning Network." She added in an interview with Tech Crunch explain:
"If I were Visa, I'd be terrified because a lot of people have cell phones, but they don't need to use the traditional system right now."
Lightning Labs raised $10 million in Series A funding in September, following a $2.5 million seed round in 2018.
LN is currently widely used in El Salvador, the first country to make Bitcoin a legal tender. Payment platform Strike and tipping tools on Twitter have also taken this approach. According to statistics, the current network collateral is 3693 bitcoins, worth about 167 million US dollars, an increase of 5.8% over the past month.
Stablecoins are now an integral part of the digital currency ecosystem and are slowly being embraced by regulators around the world. Fiat-pegged assets were recently given the green light by the U.K. Department of Economy and Finance, which intends to adapt the existing regulatory framework to include stablecoins as a payment method.