An interview with Ben Caselin on AAX-Lightning network integration and TARO protocol implementation

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AAX, one of the leading crypto platforms, is making waves with many new developments. Recently, the platform announced integration with the Bitcoin Lightning Network, which was soon followed by another update regarding support for TARO – a protocol that allows for the issuance of assets on the Bitcoin network. To satisfy our curiosity, we decided to ask Ben Caselin, head of research and strategy at AAX, a few questions for some insights.

And here’s how our short interview went.

Q: We have heard about many developments at AAX, the latest being the integration of Lightning Network. Before we dig deeper, can you tell our readers more about AAX?

A: AAX was launched in November 2019 with a strong focus on institutional standards. It is currently one of the most prominent exchanges in the Asia-Pacific region and is rapidly expanding to other continents. Our platform is powered by LSEG technology – the same technology that powers the London Stock Exchange, Borsa Italiana and Oslo Stock Exchange.

We at AAX are deeply committed to accelerating the adoption of Bitcoin and digital assets. As of now, our platform can process most orders in less than 800 microseconds, combined with a host of crypto- and DeFi-focused products. In 2022, we will focus on expanding our work in key emerging markets such as Brazil, Nigeria and Turkey to give everyone access to the benefits of crypto.

Q: How does AAX differ from other crypto exchange platforms?

A: For example, AAX offers the lowest fees in the market and above the market returns for savings. We are known for our fast customer service, which we offer 24×7 in multiple languages. In addition, AAX is the first exchange to switch to the Satoshi standard. After this, we also launched the first SATS spot market with no trading fees.

Q: Tell us more about Lightning Network integration and how it is expected to help users.

A: Lightning Network is a second-tier solution on top of Bitcoin that is increasingly being adopted, especially in emerging markets. This is mainly because transactions in bitcoin on the Lightning Network are almost free and settlement is almost instantaneous. In that sense, adding Lightning support opens up a new avenue for those who have bitcoin in a Lightning app to make deposits in AAX. This in turn makes withdrawals cheaper while facilitating smaller trades (something in line with our SATS spot market).

By integrating the Lightning Network, AAX aims to allow small merchants/holders to enjoy the benefits of lower fees and minimum limits. In addition, this integration allows for arbitration between other Lightning-integrated exchanges by connecting AAX to a fast-growing bitcoin payment network that also integrates Twitter. The result will help AAX lower barriers to entry, accelerating crypto adoption.

Q: What are the changes you expect to see in user behavior and experience on AAX after the Lightning Network integration?

A: Many bitcoin-focused community members look for exchanges that support the fast and cheap funding method. We expect to experience easier onboarding in Latin America, where the Lightning Network is rapidly being rolled out. In addition, the integration also opens the door to more liquidity supply partnerships and potential innovation around Lightning-based revenue products.

Q: Is there a migration process or some kind of action that the users need to take on their part to take advantage of Lightning Network?

A: Lightning withdrawals are only useful for users who have a Lightning app or if they withdraw to another exchange that supports Lightning Network. Users could also pay Lightning bills with their bitcoin funds on AAX.

Q: Do you think people will be interested in using BTC on the Lightning Network during this period of market uncertainty?

A: Bitcoin is a volatile asset and as a means of daily payments it is probably too volatile for many people. But several teams are working on adding additional capabilities to this technology. One we’re excited about is TARO, a project that aims to add generalized smart contracts and tokens to Bitcoin, using the same basic technology as the Lightning Network.

The biggest selling point, of course, is the ability to transact in stablecoins: cheap rates and instant settlement of Lightning, but without the price volatility of BTC.

Q: What are some of the possibilities with TARO and how does this protocol differ from other alternative chains of the first and second tier, such as Solana, Polygon or Ethereum for example?

A: In Taro, smart contracts and asset transfers are not performed by the blockchain, nor are they enforced by the blockchain. Instead, transfers are made by the sender of an asset (who must make a corresponding bitcoin transaction) and enforced by the receiver, much like the Lightning Network. The Bitcoin network, of course, contains the “checkpoint” data to ensure that if someone cheats, the transaction order can be reverted to the last shared point.

Q: When will AAX TARO also integrate?

A: It’s too early to say as the project is in testnet and the TARO team is not currently committed to mainnet launch dates. Development is clearly in full swing and we can expect the project to go live soon. AAX will of course integrate it as soon as possible once it’s live and has seen some real-world testing.

Q: Can you tell us more about the Satoshi (SATs) standard and the reason for introducing it?

A: There is a bias towards unity of price that gives newcomers to the space the impression that Bitcoin is expensive while meme coins are cheap. This is a misconception: adopting a SATS standard counteracts the preference for unit price. For example, the smallest bitcoin unit of measurement is a Satoshi (SATS) with a value of 1 SATS equal to 0.00000001 BTC.

SATS is not only the answer to the users’ perceived problems of bitcoin unaffordability and inaccessibility, but it is also an expression of a long-term vision and optimistic expectation around bitcoin’s long-term growth. There are only 21 million bitcoins that can ever exist, and since there are more than 7 billion people, SATS is expected to be adopted as the more practical term over time.

Q: Will there be some confusion among new users on the platform who are used to BTC denomination while using the SAT standard?

A: Whenever a new concept is introduced, people need time to become familiar with it – that is human nature. That said, SATS is well known in the crypto world, and since people “stack” SATS and join the conversation, it is quite easy to switch between denominations. If people can understand pennies, they can get SATS. SATS is even easier to understand and calculate and will play a vital role in facilitating micropayments and transaction fees on AAX.

Q: What are the other developments for AAX?

A: We significantly increased retail trading volume in 2021 as we hired thousands of new users. In 2022 and beyond, we want to maintain momentum as we expand our user base into emerging markets. This year, AAX is focusing on more product localization efforts to tailor the benefits of crypto to the specific needs of communities. We will also focus more on crypto projects designed to generate impact, especially around important humanitarian causes – this is how we aim to build community, advocate for the space and work to make crypto a force for good.