I saw a number of jokes online about how this only took 5 years, but still it's pretty cool. I'm sure there are a bunch of interesting uses and tricks this enables, but the one that I'm most interested in is that this should allow lightning channels to use MuSig2 so that they all look like simple single signature outputs.

The activation of Taproot grants protocol developers with a number of new tools including: schnorr, musig2, scriptless scripts, PTLCs, merkalized script trees and more.

The approach seems to be to introduce many of these things in steps, rather than as a single large upgrade to lightning:

we instead propose a step-wise update process, with each step layering on top of the prior with new capabilities. While the ultimate realization of a more advanced protocol may be delayed as a result of this approach, packing up smaller incremental updates will be easier to implement and review, and may also hasten the timeline to deploy initial taproot based channels.

And so this is one of the first steps to taproot maxxing lightning.

In this document, we start by revising the most fundamental component of a Lightning Channel: the funding output. By first porting the funding output to Segwit V1 (P2TR) musig2 based output, we're able to re-anchor all channels in the network with the help of dynamic commitments. Once those channels are re-anchored, dynamic commitments allows developers to ship incremental changes to the commitment transaction, HTLC structure, and overall channel structure -- all without additional on-chain transactions.

Who's gonna be the first stacker with a taproot channel?