The maxi-maligned and ugly step-cousin of the Bitcoin blockchain, the Liquid network, has been remarkably reliable since its inception. We don’t often hear it having to be restarted, yes I’m talking to you, Solana.
Now I know Liquid is not everyone’s cup of tea, you don’t offer unilateral exit, and you’re going to get hate from the maxi community, and that’s fair. You don’t want to have to rely on the trust of a federation, and you want to be able to verify and pull the rip cord at any time.
Liquid ofcourse does give you the option to verify on your own, any pleb can run a Liquid node and even peg-in Bitcoin themselves, the only issue is getting out isn’t as smooth, so you’re better off swapping out with a service provider.
Despite the hate, Liquid continues to chug along secure blocks and even add improvements.
Why Liquid Just Got A Lot Cheaper?
Blockstream technical providers for Liquid have been working towards the release of Elements 23.2.5 and the deployment of ELIP 200 for some time, and now it’s finally arrived, bringing discounted fees for Confidential Transactions (CT).
Typically, CT is about ten times larger than regular, unblinded transactions in Elements. Due to their larger size, CT requires an order of magnitude higher transaction fee.
Under the new fee policy change in ELIP 200, CT weight and virtual size are discounted, making their fees more closely aligned with unblinded transactions at the same fee rate.
This update makes Liquid’s private transactions even more economical, particularly when stacking Bitcoin in high-fee environments, swapping to Lightning, or sending cross-border stablecoin remittances.
Liquid fees were already cheap, considering no one was bidding for block space, but now it’s even cheaper and can still handle considerable volume with its faster block times and plenty of open block space available.
Taking Your Sats Into Stealth Mode
Confidential Transactions add an invisibility cloak for your payment balance, which i’m sure you can appreciate, why do you want to know how much i’m spending? Stalker or maybe your wife likes to keep tabs on your stack; both of that is a bad opsec, and CoinJoining every damn time and using a set amount isn’t practical for day-to-day transactions.
Liquid offered an easier route but until now, that invisibility cloak came with a designer price tag. It’s like paying extra for tinted windows on your car, except instead of hiding your bad dance moves at red lights, you’re protecting your financial privacy.
The introduction of ELIP 200 is changing the game. They’re basically having a privacy sale – “All confidential transactions, now with discount pricing!” It’s like your favourite store finally putting that thing you’ve been eyeing on sale, except instead of a new gadget, you’re getting enhanced privacy at a bargain.
Why does this matter?
Well, imagine if every time you wanted to buy coffee, you had to announce it to everyone in the cafe.
“HEY EVERYONE, I’M BUYING A $4.50 LATTE!”
Now apply that to ALL your purchases, all your trades and any business you conduct!
Not ideal, right?
Confidential transactions let you sip your metaphorical crypto-coffee in peace, and now they’re more accessible than ever.
The best part? This fee reduction shows that privacy doesn’t have to be a luxury feature. It’s a step toward making financial privacy more accessible to everyone, not just Bitcoin whales who can afford premium fees.
With fees now dramatically reduced, Liquid’s financial privacy features are more accessible and affordable than ever before.
Confidential Transactions were already the default type on Liquid, but by reducing fees to match those of public transactions, we can further incentivise the adoption of Bitcoin for practical use in smaller amounts, while Liquid is also the most competitive rail for USDT transfers. This is particularly beneficial in emerging markets served by user-friendly wallets like AQUA, Green, and Bull Bitcoin.
To give you an example of how much better Liquid has become, a confidential $USDT – Liquid transaction that previously cost 250 sats in fees now requires only 25 sats—around 0.03 cents at current $BTC prices. This makes Liquid a more compelling option for sending cross-border remittances or stacking Bitcoin.
25 sats means even if you’re sending $1 or roughly 1000 sats, you’re only paying 2.5%; while nowhere as cheap as Lightning, it’s still way cheaper than any other blockchain.
The $137 Billion Gorilla In The Room
While there are several stablecoins around, Tether is the market leader and three times the size of its closest competitor in USDC, so really, the other stablecoins don’t matter in the grand scheme of things.
When we look at where USDT is deployed, $76 billion is issued onto Ethereum, $59 billion lives on the Tron blockchain, while Solana holds $1.8 billion. Liquid, by comparison, only has $36 million worth of Tether in circulation, so you can see how small a market it is relative to the other chains.
Liquid would need to 50x its USDT circulation to match Solana.
Now that’s a considerably large market that Liquid can port over and bring over that Tether use-age to its ecosystem, earn more fees and grow its side-chain. Â
The market for USDT on those other chains is fueled by DEFI, trading shitcoins, NFTs, yield farming liquidity pools and a host of unsustainable business practices and general speculation.
However, some of that use is actual savings and day-to-day purchases, and this is the market that Liquid should be after, pulling out the USDT savers, commerce and remittance market.
If you’re not interested in speculation, and your use of USDT is practical, you are considerate of the fees you need to pay, and this is a strong incentive to switch service providers or, in this case, blockchains. Ethereum has alienated a lot of that market with its higher fees, and TRON was the initial beneficiary; TRON fees have since risen, and many of those users are now moving over to Solana.
TRON still keeps users in their ecosystem with “Free” or discounted transfers by encouraging their users to stake the native token in exchange for a transaction fee budget in the form of “energy” and “bandwidth” that replenish over time.
Looking at what the competition has to offer and the incentives, where does Liquid offer users more bang for their buck?
- Cheapest USDT transactions around
- No need to own another shitcoin to pay for fees; you can pay in Bitcoin or in USDT with the help of Liquid Taxi.
- No need to stake another shitcoin and bleed out value just because you want to save on fees
- Confidential transactions offer more privacy at the base layer, and the UTXO model makes it harder to attribute transactions to one person versus the account model.
Now For More Liquid On-Ramps
Being the cheapest option for transferring USDT and swapping between stablecoins and Bitcoin on-chain is an appealing selling point, but it doesn’t mean much if you have to jump through several hoops to get into this ecosystem, such as setting up a Liquid wallet and funding it.
Obviously people first have to learn that they’re being shafted by using other blockchains and then they’ll need to figure out how I move USDT from those other chains onto Liquid instead. They’ll also need to learn the nuances of liquid, how to move in and out of the network and transact with users who have not yet moved over, so there’s plenty of friction involved.
Sure, you can make the case that anywhere Bitcoin and Lightning are available is one potential hop away from Liquid, but it wouldn’t hurt if more exchanges and P2P platforms offered native support for the chain.
