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Taro is a protocol for issuing assets on the Bitcoin blockchain. These assets can be fungible assets such as stablecoins, Non-Fungible Tokens(NFTs), and other collectable assets. With the utilization of the Lightning network, Taro can transfer these assets with atomic transactions fast and at a low cost. To store assets, Taro utilizes taproot to store hashed data on Bitcoin blockchain transactions. While storing this data on the blockchain could be expensive, Taro uses Lightning HTLC to keep costs low.
Taro Transaction on Lightning
Non Fungible Assets are issued on a single on-chain transaction. Ownership transfer is done off chain by transferring the unique Identifier and a verification file containing transaction history data for authentication. This information is stored in Taro Asset Universes which are similar to Bitcoin Block explorers and can be run by any interested party in an asset.
Because assets can be split and merged, any Taro asset owner can change ownership inside an existing user group that has assets in the same Merkle tree, or a different one.
Taro create a payment routing method that enables Lightning Network channels to utilize taro assets when building payment channels. Payment routes with multiple assets can occur provided that the nodes opt into receiving taro assets while agreeing to forward the Taro value in Satoshi when creating new channels.
Lightning transaction with Taro asset
Taro Asset exchange on the Lightning Network
Taro asset exchange rates are determined by peers in a lightning invoice. Rates can be determined through markets or individually.
Any Lightning node can act as an edge node, competing with other nodes over fees collected during forwards and swaps. These fees include routing and swap fees, or a spread.
When creating an invoice to exchange Taro assets, The recipient and peer agree on an exchange rate before generating an invoice. They use the agreed upon price to generate a Lightning invoice. Once an invoice is created a payment channel is made through the BTC Lightning Network. Once the recipient acknowledges it has received the agree upon asset amount(ex. L-EUR), they will release the preimage.
Multi-asset Taro asset exchange on the Lightning Network