Sidechain · settles to Bitcoin
Liquid Network ticker L-BTC
Summary
Federated block signing (Blockstream calls the design a Strong Federation). Fifteen functionaries, each keeping its signing keys in a hardware security module attached to its host computer, take turns proposing a block every minute; a block is valid only with signatures from at least two-thirds of the block signers, stated in the docs as an 11 of 15 quorum. There is no mining, difficulty adjustment or block reward. The same functionaries act as watchmen for the two-way peg: BTC sent to the federation's multisig on Bitcoin is claimable as L-BTC after 102 Bitcoin confirmations, and peg-outs back to BTC are signed by the watchmen for users holding peg-out authorization keys. Liquid is built on Elements, an open-source platform derived from Bitcoin Core code, and adds confidential amounts and assets, issued assets and extra script features. 1231516172123
Design
- System
- SidechainLiquid runs its own consensus, federated block signing by a fixed set of functionaries, and is joined to Bitcoin only by a two-way peg whose BTC is held in a federation-controlled multisig. Liquid blocks are not written to Bitcoin, Bitcoin miners do not order Liquid transactions, and Bitcoin cannot enforce withdrawals, so it is not a rollup. Liquid's own material calls it a federated sidechain and a Bitcoin layer-2 sidechain; this profile uses the sidechain label because the peg, not Bitcoin, is what connects the two. L-BTC (also written LBTC) is the native asset used for fees.
- Settles to
- BitcoinThe only link to Bitcoin is the two-way peg: L-BTC is backed by BTC held in a federation multisig on Bitcoin, peg-ins wait 102 Bitcoin confirmations, and validating nodes check peg-in claims against a Bitcoin node. Liquid transactions do not settle on Bitcoin in the rollup sense: Liquid blocks are not recorded there and Bitcoin cannot check Liquid state or force a withdrawal.
- Settlement family
- Bitcoin family
- Scarce resource
- Reputation
- State model
- UTXO
- Finality
- Other
- Who makes blocks
- The fixed set of 15 functionaries, rotating round robin, one block per minute. The federation had 87 member organizations after January 2026; membership and the functionary operator role are governed by the federation's member charter and its boards, not by open mining or staking. The operators of the 15 functionaries are not named on the pages reviewed.
- Fork choice
- No open weight-based fork choice. A block needs signatures from at least two-thirds of block signers, and signers refuse to sign any block that would reorganize more than one block, so two confirmations are treated as final. If a third or more of functionaries are offline, block production stops rather than forks. In September 2026 the operators restarted the chain from the last block before an exploit and re-included the transactions they verified as valid.
Qualifications
- Block production openness · Not applicable. Only the fixed federation of functionaries can sign blocks; there is no open mining or staking route into block production. Anyone can run a node, verify blocks and transact.
- Scarce resource · Partial. No resource is spent or locked to produce blocks. The right to sign comes from being one of the 15 functionaries admitted by the federation, which is closest to an authority or reputation model.
- Finality · Partial. Two-block finality is a signing policy of the functionaries, not proof of work or an economic penalty. Blocks stop if a third of signers are offline (a 2021 upgrade halted signing for about 22 hours). In September 2026 the operators replaced the chain from block 4,050,336 onward after an exploit, re-including transactions they verified as valid.
- Block reward and issuance · Not applicable. There is no mining, difficulty adjustment or block reward. L-BTC enters circulation only when BTC is pegged in, and should equal the BTC held by the federation.
- Slashing · Not applicable. Functionaries post no stake that can be destroyed; accountability runs through the federation's membership, boards and charter.
- Peg availability · Partial. As of 27 September 2026 Liquid's site says L-BTC peg-outs remain paused after the 6 September 2026 incident; user transactions resumed on 10 September.
Tradeoffs
- Emphasizes
- Scalability Contested
- Gives up
- Decentralization and trust minimization: a fixed federation of 15 functionaries signs every block and controls the BTC that backs L-BTC, ordinary users cannot redeem L-BTC for BTC on their own, and users trust that at least two-thirds of functionaries stay honest, online and running correct software. In return blocks come every minute with two-block settlement, amounts and asset types are hidden by default, and the documented minimum fee rate is low.Liquid's own material presents the fixed signer set as a security benefit: no hash-power reorganizations and a two-block settlement rule. That reading rests on trusting the federation and its software. The September 2026 incident, in which a validation bug let about 4,000 unbacked L-BTC be created and most of it pegged out, shows the peg can fail without any functionary colluding. Because Liquid's own material claims a security benefit that this profile does not grant, the reading is marked contested.
- Full node at home
- Practical at home 5Liquid docs list about 50 GB of disk growing about 10 GB a year, 8 GB RAM minimum with header trimming turned on (16 GB recommended) and about 100 GB of bandwidth a month; a Raspberry Pi 4 with 8 GB is mentioned for hobby use. By default a validating node checks peg-ins against a synced Bitcoin Core node, which adds Bitcoin's own requirements. A home node can verify blocks but cannot take part in block signing, which is limited to the functionaries.
- Throughput claims
- No classified figure recorded
Scaling layers
No scaling layer recorded in this profile.
Capabilities
| Capability | How it is provided | Notes and sources |
|---|---|---|
| Account abstraction | Structured assessment pending | Not yet assessed for any chain. |
| Atomic swaps | Built into the protocolLimited scope | Liquid transactions can move several issued assets at once, so two parties can swap assets in one transaction that each signs in turn (partially signed Elements transactions), and consensus enforces both assets; SideSwap builds on this. Limit: same chain only. Swaps between L-BTC and Bitcoin or Lightning have been offered by separate services such as Boltz, which describes them as non-custodial; Boltz is cited only from its code repository, and its website did not resolve in this review. Hash-time-locked contracts are also expressible. LiquiDEX proposals are assessed under signed partial offers. 7829 |
| Authenticated data publication | Core-team softwareLimited scope | Blockstream's Liquid Asset Registry lets an issuer publish asset metadata (name, ticker, precision, issuer domain, with domain proofs) whose hash the asset's issuance transaction records as its contract hash; anyone can fetch the entry and check it against that on-chain hash. Block validity does not need the data: retrieval runs through the registry service that Blockstream, publisher of Liquid's developer documentation, operates at assets.blockstream.info. Limit: asset metadata only, fixed once registered, so there are no discoverable updates. 10 |
| Light clients | Unknown | Not yet assessed under the current definitions; no documented light-client verification path for Liquid was found. Wallets described in the docs sync through indexing servers such as Esplora and Waterfalls, which the wallet trusts for its view of the chain, so they are not light verification; Waterfalls also learns which addresses belong together. 1112 |
| Native staking or delegation | Structured assessment pending | Not yet assessed for any chain. |
| On-chain governance | Structured assessment pending | Not yet assessed for any chain. |
| Parallel execution | Structured assessment pending | Not yet assessed for any chain. |
| Payment or state channels | Unknown | No payment or state channel network anchored to Liquid was verified. Swap services connect L-BTC to Bitcoin's Lightning Network, but those are swaps, not channels on Liquid. 29 |
| Programmable spending | Native (protocol or core-team software) Earlier definition | Outputs carry Elements script, derived from Bitcoin Script, with extra opcodes, and Simplicity, a typed, formally specified language committed through Taproot, has been live on mainnet since the third quarter of 2025. Contracts check proposed spends of coins; there is no account VM or shared global state. 372023 |
| Protocol-verified messaging | Structured assessment pending | Not yet assessed for any chain. |
| Reversible transfers or recovery | Unknown | Not yet assessed under the current definitions; timelocks and Simplicity contracts can express vaults, escrow and timeout paths that wallets build, but these are building blocks and no live implementation is cited. No protocol feature reverses or delays a confirmed payment. The federation's emergency keys are a backstop for the peg's BTC, not a user recovery path. 17 |
| Rollups | Unknown | No rollup anchored to Liquid was verified. A bridge to Bitcoin with lower trust assumptions, built on BitVM techniques, is a research track only. 18 |
| Shielded transfers | Structured assessment pending | Not yet assessed for any chain. |
| Signed partial offers | Built into the protocolLimited scope | LiquiDEX swap proposals: a maker signs a partially signed Elements transaction (PSET) with one input, a full UTXO that stays in the maker's wallet, and one output naming the asset it wants; any taker adds the other inputs and outputs and completes it, so both legs settle in that one transaction or not at all, with consensus enforcing both issued assets. Limit: one input-output pair per proposal, and the whole UTXO is spent. The cited page does not describe cancellation; a proposal lapses once the maker spends that UTXO elsewhere (inferred from UTXO spending rules). 9 |
Reading these values
- How this feature is provided
- Built into the protocol, core-team software or independent software says where a feature lives and who can change it. These are implementation layers, not quality: core-team software is not closer to the protocol than independent software.
- Structured assessment pending
- The shared review has not assessed this feature for any chain yet (Account abstraction, Native staking or delegation, On-chain governance, Parallel execution, Protocol-verified messaging and Shielded transfers). That does not mean it is absent, and a chain’s profile may already describe it.
- Unknown
- The review has not established this for this chain under the current definition; the note beside it says why. Unknown is not absent and not a low score. A feature reads “Not present” only when a source shows it is absent.
- Earlier definition
- Payment or state channels, Programmable spending and Rollups keep the earlier definition until the next fact-check. There, “Native” does not separate the protocol from core-team software, “Ecosystem software” does not say who publishes it, and “Partial” does not say which layer.
- Reading across rows
- The list of capabilities is incomplete. Do not read these rows as a chain leading or lagging overall.
Ecosystem & custody
| Product type | Status | Notes and sources |
|---|---|---|
| Automated market makers | ThinBitmatrix | Bitmatrix launched on mainnet in 2022 as an automated market maker built with Liquid's script opcodes; its current activity was not verified. The busier trading venues found, SideSwap's swap market and the TDEX swap protocol, are swap and market-maker venues that were not verified as automated market makers. Liquidity depth was not measured. 222728 |
| Issuer-native stablecoins | Established in the ecosystemUSDt (Tether), DePix | Tether lists the Liquid blockchain as a supported protocol for USDt, issued directly as a Liquid asset. DePix is a Liquid-issued stablecoin denominated in Brazilian reais that Liquid's Q1 2026 update says accounted for roughly half of the network's transaction volume; its issuer and backing were not reviewed. Native here means issuer-issued on Liquid, not a protocol asset. 171926 |
| Algorithmic stablecoins | Unknown | No source was cited for absence, so the rule that absence needs a source makes this unknown. The earlier review found no algorithmic stablecoin with material usage on Liquid. |
| Bridges | Native to the protocolLiquid federated two-way peg (BTC and L-BTC), Boltz swaps (Bitcoin, Lightning), SideSwap peg-in and peg-out service | The peg is part of Liquid's consensus rules: peg-ins wait 102 Bitcoin confirmations (about 17 hours) and peg-outs normally take 11 to 35 minutes. Only functionaries and members holding peg-out authorization keys can peg out directly; the public exits through members and exchanges such as SideSwap, or through swap services such as Boltz. Other bridges were not reviewed. Risk: L-BTC is only as good as the federation: 11 of 15 watchmen control the BTC reserve, three emergency keys can reach all peg funds if the network stops for an extended time, and peg-outs depend on authorized members. On 6 September 2026 a validation bug let an attacker create about 4,000 unbacked L-BTC and peg out 3,996 BTC through SideSwap, whose signing key was kept online against the federation charter. About 3,400 BTC was returned; about 602 BTC was still under recovery in the 25 September report, and peg-outs were still paused on 27 September. A bridge using BitVM is research only. 1461416171829 |
| Block explorers | Established in the ecosystemliquid.network (Mempool Open Source Project), Blockstream Explorer (Esplora) | Liquid's site links liquid.network as its explorer, and Blockstream runs a Liquid Esplora explorer and API. Both run open-source software that can be self-hosted; a public instance's view is provider data, not independent validation, and confidential amounts are visible only with blinding keys. 11142425 |
| Hardware wallets | First-partyBlockstream Jade | Jade, made by Blockstream (Liquid's technical provider), is the hardware signer Liquid's wallet-kit docs name for L-BTC and issued assets. See custody rows: Blockstream documents an older Ledger Nano S path through its Green app with a Blockstream co-signer, Ledger's own wallet has no Liquid network, and no Trezor signing path is documented. 13303335363738 |
Hardware-wallet custody
| Device maker | Status | What users can and cannot do |
|---|---|---|
| Ledger | Through an intermediaryBlockstream Green, Blockstream's own wallet app, with the original Ledger Nano SSame as native: Unknown | Can: Receive and spend L-BTC and a short list of Liquid assets, including Liquid USDt, with a Ledger Nano S through Blockstream Green, per Blockstream's help center and a 2020 Liquid blog post Cannot: Manage Liquid in Ledger Wallet (formerly Ledger Live): current Ledger Wallet code has no Liquid network Cannot: Spend a Liquid asset outside Blockstream's supported list once it reaches a Nano S Liquid address, except through an emergency restore, per Blockstream's help center Cannot: Sign alone in the setup Blockstream described in 2020: the Nano S holds one key of a 2-of-2 multisig and Blockstream Green's server co-signs after a two-factor checkBlockstream documents only the original Nano S, and the 2020 post describes Green's Android app; newer Ledger models, other platforms and today's Blockstream app were not confirmed, and the path was not tested. Ledger's crypto-asset service lists a network named Liquid BTC, but a registry entry alone does not show wallet support. Ledger's Liquid wallet page returned 404. Blockstream's Liquid Wallet Kit carries a client for a new Liquid Ledger app that it says is being built, marked work in progress and not for production. 3135363740 |
| Trezor | UnknownSame as native: Unknown | Cannot: Hold L-BTC or Liquid-issued assets in Trezor Suite: Liquid is not among Suite's networks in current code, and Blockstream's wallet kit names only Jade as a supported hardware signerTrezor has not said it does not support Liquid: a request to add L-BTC and Liquid USDt, opened in April 2025, was still open in Suite's public repository at review, and its only comment copies in another user without answering. No Trezor or Blockstream page documents a Trezor signing path. A Trezor page titled Liquid lists Solana as its network and appears to describe a different token of the same name. 1333343839 |
Public data
iKnow Blockchain has no public-data lookups for Liquid Network yet. This is a limit of the service, not a statement about the network.
| Lookup | Status | What it covers and its limits |
|---|---|---|
| Address or account | Not available yet | Public-data lookups for this chain are not built yet. |
| Tokens and assets | Not available yet | Public-data lookups for this chain are not built yet. |
| NFTs | Not available yet | Public-data lookups for this chain are not built yet. |
| Transactions | Not available yet | Public-data lookups for this chain are not built yet. |
Sourced developments
Developments: Review overdue Reviewed Sep 27, 2026; next review was due Oct 7, 2026, 12:00 UTC.
Publication date · newest first
-
Assessment published for the 6 September L-BTC inflation exploit; peg-outs still paused
Blockstream's assessment says an attacker used a flaw in the range-proof check cache to create about 4,000 unbacked L-BTC and pegged out 3,996 BTC through SideSwap. About 3,400 BTC was returned and about 602 BTC remained outstanding. Elements 23.3.4 fixed the flaw, the chain restarted from the last block before the exploit, and user transactions resumed on 10 September; peg-outs stayed paused.
- Implementation:fix released in Elements 23.3.4 on 9 September 2026
- Release:Released
- Activation:user transactions resumed 10 September 2026; peg-outs still paused on 27 September 2026
Sources: The Liquid Blog (Blockstream) — Liquid Network Security Incident Assessment (external site) · Liquid Network — Liquid Network (external site) · ElementsProject (GitHub) — elements-23.3.4 (external site)
-
Elements 29.4.1 release candidate tagged for testing; no final 29.x release yet
The Elements project published a signed elements-29.4.1rc1 tag on 12 August 2026. It is a release candidate, not a final release, and GitHub shows no release notes for it. Blockstream's May 2026 roadmap said Elements had reached parity with Bitcoin Core 29, aimed for a release candidate by July 2026 and left the final release to Technology Board and federation review. As of 27 September 2026 the latest final release was still 23.3.4 from the 23.x line.
- Proposal:on the May 2026 roadmap with a July 2026 release-candidate goal
- Implementation:release candidate 29.4.1rc1 tagged on 12 August 2026
- Release:release candidate only; no final 29.x release as of 27 September 2026
- Activation:none confirmed; final release subject to Technology Board and federation review
Sources: ElementsProject (GitHub) — elements-29.4.1rc1 (external site) · ElementsProject (GitHub) — Elements releases (external site) · The Liquid Blog — Blockstream Shares Liquid Development Roadmap: 0-Conf, PQ Readiness, BitVM & More (external site)
-
Blockstream's 0-conf visibility service for Liquid announced as available
Blockstream described a hosted service that reports how widely an unconfirmed Liquid transaction has spread across observing nodes, so merchants and apps can decide whether to accept a payment before it confirms. The service reports visibility only and does not guarantee confirmation.
- Implementation:hosted service operated by Blockstream
- Release:available after a beta with federation members
- Activation:not a consensus change
Sources: The Liquid Blog — 0-Conf for Elements and Liquid: A Technical Explainer (external site) · Liquid Developer Documentation (Blockstream) — 0-Conf Service (external site)
-
Blockstream publishes Liquid roadmap with post-quantum work and BitVM bridge research
The roadmap lists planned and research items: a hard fork allowing issued assets other than L-BTC above the 21 million limit, targeting a late May 2026 activation window; fees paid in assets other than L-BTC, under review by the federation's technology board; an optional user-pays peg-in policy, merged and available in a release candidate; cheaper Taproot sweeps of the peg's bitcoin targeted for 2027; staged post-quantum readiness; and a BitVM-style bridge with lower trust assumptions as a research track.
- Proposal:roadmap items at different stages
- Implementation:varies by item
- Release:most items not released at publication
- Activation:not confirmed for any consensus change in this review
Sources: The Liquid Blog — Blockstream Shares Liquid Development Roadmap: 0-Conf, PQ Readiness, BitVM & More (external site) · ElementsProject (GitHub) — elements-23.3.4 (external site)
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Seven companies join the Liquid Federation, bringing membership to 87
The Liquid Federation added Cowbolt, Eulen, illuminodes, Mooze, OrderMoon, Sorted Wallet and SOUSTA, bringing total membership to 87.
- Implementation:membership change
- Release:Announced
- Activation:members admitted
Topics your AI can explain
Your AI can explain these topics for Liquid Network through the connection, with sources.
Known gaps
What this profile's review did not establish:
- No throughput figure is listed; no primary-source rate was classified for this profile.
- The identities of the 15 functionary operators were not found on the pages reviewed; the federation page names roles and boards but no operators.
- The emergency-key backstop is described only as three keys behind a timelock; who holds them, how many must sign and how long the timelock runs were not stated in the pages reviewed.
- About 602 BTC of the peg reserve was still outstanding in the 25 September 2026 report, which says only that it remains subject to ongoing recovery efforts; it does not say who bears the shortfall or whether L-BTC remains fully backed, and peg-out resumption had no date.
- The number of original-chain blocks replaced during the September 2026 recovery was not stated.
- Ledger use with Liquid rests on Blockstream's help center and a 2020 Liquid blog post, which cover the original Nano S through Blockstream Green with a Blockstream co-signing server; newer Ledger models, today's Blockstream app and the current co-signing arrangement were not confirmed, Ledger's Liquid page returned 404, and Blockstream describes its new Ledger client as work in progress.
- Trezor has neither documented a Liquid signing path nor stated that it does not support Liquid; an April 2025 request to add Liquid to Trezor Suite was still open at review.
- Only Bitmatrix was confirmed as an automated market maker, and its current activity was not verified; SideSwap's and TDEX's pricing mechanisms were not confirmed.
- The issuer, backing and redemption terms of DePix were not reviewed.
- No channel network, rollup or further sidechain anchored to Liquid was verified.
- No light client verification path for Liquid was documented in the pages reviewed.
- Boltz's own website and docs did not resolve during this review; its Liquid swap mechanics are cited from its code repository description only.
- Whether the change removing the 21 million issuance limit for assets other than L-BTC is active on mainnet was not confirmed: Elements 23.3.4 (9 September 2026) turns it on by default for Liquid, but no activation notice was found. The user-pays peg-in change was only in a release candidate when the May 2026 roadmap was published.
Sources
Oldest dated source check: Source checked Sep 27, 2026 Next check due Oct 27, 2026.
- Technical Overview (external site)
- How Liquid Works (external site)
- Bitcoin vs Liquid (external site)
- Peg-in and Peg-out (external site)
- Running Your Elements Node (external site)
- Elements vs Liquid (external site)
- Smart Contracts (external site)
- Swaps, Options & Smart Contracts (external site)
- LiquiDEX (external site)
- Liquid Asset Registry (external site)
- Esplora (external site)
- Waterfalls (external site)
- Features (Liquid Wallet Kit) (external site)
- Liquid Network (external site)
- Liquid Federation (external site)
- The Truth About Liquid (external site)
- Liquid Network Security Incident Assessment (external site)
- Blockstream Shares Liquid Development Roadmap: 0-Conf, PQ Readiness, BitVM & More (external site)
- Liquid Federation Quarterly Update - Q1 2026 (external site)
- Liquid Federation Quarterly Update - Q4 2025 (external site)
- Liquid Welcomes Seven New Bitcoin-Native Companies to the Federation (external site)
- Bitmatrix Mainnet Is Live (external site)
- Elements (external site)
- liquid.network explorer (external site)
- Liquid Explorer (external site)
- Supported Protocols (external site)
- SideSwap (external site)
- TDEX (external site)
- boltz-backend (external site)
- Blockstream Jade (external site)
- lwk_ledger (external site)
- Supported crypto assets (external site)
- Supported coins and assets (external site)
- Liquid wallet (token page) (external site)
- Liquid assets supported by the Ledger Nano S (external site)
- Liquid Asset Support Now on Ledger Nano S (external site)
- Ledger Wallet coin-module loaders (loaders.ts, develop branch) (external site)
- Trezor Suite network configuration (networksConfig.ts, develop branch) (external site)
- Feature Request: Support for Liquid Bitcoin (L-BTC) and Liquid USDT (issue 18452) (external site)
- Ledger crypto-assets service, network list (external site)
Report an error
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Funding disclosure
Funding disclosures appear here when an upkeep arrangement exists, in the form “Upkeep funded by [name]; verdicts unaffected.” The funder ledger has not been published yet. Neutrality & funding