Liquid Network

2 min read

The Liquid Network is a sidechain protocol built on top of the Bitcoin blockchain. The Liquid Network was created by Blockstream but is governed by a federation of parties and operated on an open-source blockchain platform called Elements.

Liquid Network Features

The Liquid Network offers several features not offered on the Bitcoin blockchain:

  • Fast, Final settlements. Liquid blocks are added precisely every minute, compared to Bitcoin’s 10-minute, probabilistic block times. Additionally, reorganizations are disallowed, ensuring that two confirmations is sufficient to establish the final settlement of a transaction.
  • Multiple Assets. Third parties can issue tokens—securities, stablecoins, and more–on the Liquid sidechain.
  • Confidential Transactions. The Liquid Network allows transactions to mask the amount and asset type of a transaction from the otherwise public ledger, allowing users to transact more privately.

Bitcoin on the Liquid Network is known as L-BTC or Liquid Bitcoin, and using it is analogous to depositing cash at a casino in exchange for chips.

Using Bitcoin on the Liquid Network

A user must lock up their bitcoin in a transaction known as a peg-in. This is achieved by depositing bitcoin to an address generated by the Liquid Network. When this deposit is confirmed, the user will be issued an equivalent amount of L-BTC and be able to transact on the Liquid Network.

To peg-out and receive their bitcoin back, a user must deposit their L-BTC before the Liquid Network sends the bitcoin. Currently, the Liquid Network will only return bitcoin to a verified address.

Today there are relatively few wallets that support the Liquid Network. Activity on the network can be monitored through a dedicated block explorer.

Learn more about the Liquid Network.