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With the upcoming taproot upgrade in 2021-Nov, how does this improve Lightning Network functionality?

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  • with taproot we can create cancelable payments to mitigate a stuck onion.
  • we can create multiparty Channels with less onchain footprint as only one aggregated signature is necessary (however it is a complex dataflow without eltoo)
  • payment decorelation becomes possible via adaptor signatures. The payments secrets can change at every hop and thus payments at various nodes will become harder to corellate (before we had the same payment hash)
  • because payment points are linear (which hash functions are not) we can easily create escrow services on a payment level where the escrow does not need to be part of each channel but just keeps a secrete part of the full preimage

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