claude-dev-suite Liquid Network
Liquid is a federated sidechain pegged to Bitcoin, developed by Blockstream. Funds are locked on Bitcoin via federation multisig and unlocked on Liquid as L-BTC.
Codebase: Elements (github.com/ElementsProject/elements), a
Bitcoin Core fork with extensions.
Architecture
- Federation: ~15 functionaries (Blockstream + partners).
- Block production: round-robin among functionaries.
- 2-minute target block time.
- Peg-in: send BTC to federation multisig → equivalent L-BTC appears on Liquid after 102 confirmations.
- Peg-out: send L-BTC to federation → BTC released on Bitcoin after withdrawal queue.
Confidential Transactions
Liquid implements Confidential Transactions (CT):
- Output amounts are hidden via Pedersen commitments.
- Range proofs prove amount ≥ 0 and within valid range.
- Asset IDs also blinded (via blinded amounts + blinded asset commitments).
- Public key recipients can compute shared blinding factor and see the amount.
Issued Assets (IA)
Beyond L-BTC, Liquid supports:
- L-USDt (Tether on Liquid).
- L-CAD, L-EUR, L-CNY (some jurisdiction-specific).
- Custom asset issuance: anyone with funds can issue an asset.
Issuance specifies:
- Total supply (or issuance ongoing via reissuance tokens).
- Asset metadata (description, contract hash).
- Asset ID = hash of issuance tx + entropy.
Peg-in / Peg-out
Peg-in (BTC → L-BTC)
- User sends BTC to federation multisig with claim script.
- Wait 102 confirmations on Bitcoin.
- User submits claim on Liquid; L-BTC issued.
Peg-out (L-BTC → BTC)
- User submits L-BTC to federation address on Liquid.
- Federation processes withdrawal queue.
- BTC released to user's specified address on Bitcoin.
Peg-out is whitelist-based (regulated; Liquid-Pro members can peg out; retail users typically use exchanges for peg-out).
Implementation
- elementsd — full node (similar to bitcoind).
- liquid-network/elements — codebase, builds on Bitcoin Core.
- Wallets:
- Blockstream Green — mobile wallet with Liquid support.
- Sparrow — desktop, Liquid support.
- Aqua — multi-asset Liquid wallet.
Use cases
- Stablecoin payments with privacy (L-USDt).
- Faster settlement between Liquid-aware exchanges (2 min vs 60 min).
- Asset issuance: STOs, regulated tokens, gift cards.
- Confidential commercial flows: amounts hidden from competitors.
Federation governance
- Functionaries hold multisig keys.
- Block-signing rotation among them.
- Transparent membership; replacements are governance events.
Lightning on Liquid
Liquid has Lightning compatibility:
- Lightning on Liquid (LBTC channels).
- Submarine swaps BTC ↔ L-BTC via Boltz, others.
Compared to other L2s
| Aspect | Liquid | RSK | Stacks |
|---|---|---|---|
| Trust model | Federation | Merge-mining + federation | PoX (uses BTC) |
| Smart contracts | Limited (Elements opcodes) | EVM-compatible | Clarity |
| Peg | 2-way | 2-way | 1-way (sBTC bidirectional) |
| Privacy | CT default | None | Limited |
Limitations
- Federation trust: 11-of-15 multisig; large compromise = funds loss.
- Peg-out gated for retail users (typically via exchanges).
- Smaller ecosystem than EVM L2s.