Developing Solutions on Liquid Network for Fast Private Transactions

Imagine your project needs fast Bitcoin settlements with transaction privacy, but standard Bitcoin is too slow and Lightning Network offers no confidentiality. Liquid Network solves this. We develop solutions on Liquid — a federated Bitcoin sidechain by Blockstream that finalizes transactions in ~2 minutes and hides amounts via Confidential Transactions. Liquid is especially in demand on exchanges where settlement time is critical, and among asset issuers requiring privacy. For instance, when issuing security tokens with confidential balances — it's the only practical solution.

How Do Confidential Transactions Work?

Liquid uses Pedersen Commitments to hide amounts and asset surjection proofs to mask the asset type. Only the sender and receiver know the real values. Verification of correctness (no inflation) is performed mathematically without revealing data. This is the key feature for which financial institutions choose Liquid.

Why Is Liquid Faster Than Bitcoin?

Liquid does not use PoW and has no public mining. Blocks are created by functionaries — 15+ major exchanges and service providers (Bitfinex, Kraken, OKX, and others). Consensus via threshold multisig: a 2/3 functionary signature is required to create a block. This gives ~2 minute finality — 30 times faster than Bitcoin mainnet. You trust the federation, but in return you get speed and confidentiality.

Peg-in/peg-out — the mechanism for exchanging BTC ↔ L-BTC:

• Peg-in: send BTC to a federated peg address → after ~100 Bitcoin blocks (≈16 hours) you receive L-BTC
• Peg-out: burn L-BTC via the federation → after ~2 hours you receive BTC

How to Issue Your Own Asset on Liquid?

To issue an asset, follow these steps:

1. Install an Elements Core node and run it in regtest or testnet mode with parameters -chain=elementsregtest -validatepegin=0.
2. Via RPC, call the issueasset method, specifying the asset amount and the number of tokens for reissuance.
3. Save the resulting 32-byte asset ID — it is needed for all subsequent transactions.
4. Register the asset in the Liquid Asset Registry with the name, ticker, and issuer domain — without registration, wallets will display only the hex identifier.

Example asset issuance via Python:

import requests def rpc_call(method, params): resp = requests.post('http://localhost:18884', json={'method': method, 'params': params}, auth=('user', 'password')) return resp.json()['result'] issuance = rpc_call('issueasset', [1000000, 1, False]) print(f"Asset ID: {issuance['asset']}") 

After issuance, you can confidentially transfer assets using confidential addresses.

Development Tools for Liquid

Modern projects use the following stack:

Our engineers work with these tools daily — accumulated experience allows us to implement any task, from simple asset issuance to building a DEX with atomic swaps. Request a consultation — our engineers will help determine the optimal architecture for your project.

Atomic Swaps on Liquid

Liquid supports atomic swaps between different assets without an intermediary — via HTLC. Example: exchange 100 USDT-Liquid for 0.001 L-BTC. Both parties sign a PSBT transaction that atomically swaps the assets: either both receive, or neither. A DEX on Liquid is a reality.

Exchange Integration: Liquid as Settlement Layer

Exchanges use Liquid to accelerate cross-platform settlements. An L-BTC transaction settles in ~2 minutes versus 60 minutes on Bitcoin. The scheme: traders deposit L-BTC, off-chain matching, settlement via Liquid. Withdrawal via peg-out when necessary. This architecture reduces operational costs and improves user experience.

Case Study: Settlement Integration for a Cryptocurrency Exchange

We worked with a mid-tier exchange that needed to speed up cross-exchange settlements. They were using Bitcoin mainnet, leading to 60-minute confirmation times and visible transaction amounts. We integrated Liquid as their settlement layer. After deploying a federated node and implementing peg-in/peg-out, settlement time dropped to ~2 minutes. Additionally, by using Confidential Transactions, all settlement amounts became private, increasing their competitive advantage. The integration included asset issuance for their native token on Liquid to enable internal transfers. The project was delivered in 3 weeks, with ongoing support.

What's Included in the Development

• Architecture analysis and privacy requirements review
• Peg-in/peg-out integration with your exchange or wallet
• Asset issuance with registration in the Liquid Asset Registry
• Implementation of atomic swaps (if needed)
• Deployment of an Elements Core node and RPC configuration
• Testing in regtest and testnet (with peg simulation)
• Documentation on working with APIs and scripts
• Training for the client's team
• Technical support for 3 months after delivery

Timeline and Cost

Development of basic integration (asset issuance/receiving) takes from 2 weeks. A full DEX with confidential atomic swaps and asset registry takes 2 to 3 months. Cost is calculated individually based on complexity. We guarantee stable operation of the integration and provide technical support. Request a project assessment — we'll prepare a proposal tailored to your requirements.

Blockstream Liquid Documentation