Liquid Network for Beginners: Why DePix and Crypto Run on This Network
Heard of the Liquid Network and thought “is it Bitcoin? is it not Bitcoin? is it an altcoin?” This article is for you, no jargon, showing why DePix and L-BTC transactions run on this network and why Depix.Online chose Liquid as its base.
What the Liquid Network is
Liquid is a Bitcoin sidechain: not an L2 and not an altcoin. “Sidechain” means: a separate blockchain, with its own rules, but connected to Bitcoin by a mechanism that lets you move BTC from one side to the other. The so-called two-way peg.
Key characteristics
- Created by Blockstream in 2018, specifically to solve problems Bitcoin mainnet was never designed to solve.
- 1-minute blocks, versus Bitcoin's 10 minutes.
- Fees of ~R$ 0.05 per transaction (a 90% reduction with ELIP-200).
- Supports multiple assets: L-BTC, DePix, USDT-Liquid, L-CAD and dozens more.
- Confidential Transactions: amount and asset encrypted on the blockchain.
- Federated by more than 15 companies (Blockstream, Bitfinex, BitMEX and others). It is not Proof of Work.
The most important part
Liquid does not compete with Bitcoin, it complements it
- DePix only exists on the Liquid Network (Brazil).
- L-BTC is native Bitcoin converted to Liquid.
- USDT exists on several networks, in this article we mean USDT-Liquid, available through Depix.Online.
Why Liquid exists (vs Bitcoin mainnet)
Bitcoin mainnet is the safest vault on the planet. But to pay for a coffee, send R$ 50 or run day-to-day commerce, it hits three problems: time, cost and privacy.
| Criterion | Bitcoin Mainnet | Liquid Network |
|---|---|---|
| Block time | ~10 minutes | 1 minute |
| Fee per transaction | R$ 5 to R$ 50 (highly variable) | ~R$ 0.05 flat |
| Amount privacy | Public to everyone | Confidential (sender and recipient only) |
| Supports other assets? | No (BTC only) | Yes (DePix, USDT-Liquid, L-CAD…) |
| Final confirmation | 3 a 6 blocks (~60 min) | 2 blocks (~2 min) |
| Security | Proof of Work (maximum) | Federation (15+ functionaries) |
| Best use | Long-term HODL, reserve | Daily use, commerce, swaps |
It is the same logic as gold versus cash: nobody buys bread in the morning with a gold bar. Bitcoin mainnet is the gold. Liquid is the wallet.
Confidential Transactions explained
Imagine every Bitcoin transaction is a transparent cheque: anyone can see who sent what to whom, and how much. That is great for auditing but terrible for privacy. If you are paid a salary in BTC, everyone who has your address knows your salary.
How it works on Liquid
Confidential Transactions (CT) encrypt two pieces of data on the blockchain:
- The amount: nobody sees whether you sent 10 or 10,000 DePix.
- The asset: nobody sees whether you sent DePix, USDT-Liquid or L-BTC.
What stays public
- The addresses involved
- The fact that a transaction happened
It is a middle ground between total privacy (like Monero) and total transparency (Bitcoin). Enough to protect your balance and spending patterns without becoming a “criminal network”, authorised auditors can still see what they need to, using your viewing key.
Who unlocked this?
Adam Back and the Blockstream team, using a technique called Pedersen Commitments. In 2024, the ELIP-200 upgrade improved the cost further: a CT transaction dropped from ~400 sats to ~53 sats, a 90% saving.
Assets on Liquid
Liquid does not only run “Liquid Bitcoin”. It is an asset issuance platform: any authorised entity can issue an asset, and the network validates it just as it validates L-BTC.
| Asset | Backing | Issuer | Typical use |
|---|---|---|---|
| L-BTC | 1:1 with BTC | Liquid Federation | Fast, cheap BTC transactions |
| DePix | 1:1 with the Real (BRL) | Plebank (regulated Brazilian VASP) | PIX payments, sales, receiving funds |
| USDT | 1:1 with the US Dollar | Tether | Store of value, swaps on Liquid |
| L-CAD | 1:1 with the Canadian Dollar | Bull Bitcoin | Canadian market |
| EXOR-EQTY | Tokenised equity | Exordium | Capital markets |
Note: USDT exists on several blockchains (Ethereum, Tron, Polygon and others). In the table above the reference is specifically to USDT-Liquid, available at Depix.Online through DepixSwap.
What this means for you
A single Liquid wallet holds Reais, Dollars and Bitcoin at the same time, with the same 12-word seed, at the same lq1q… address. No need to open accounts in three different places.
DePix: a regulated Real stablecoin
DePix is an authorised Real stablecoin in Brazil, issued by Plebank with full KYC and AML procedures and reported to the Brazilian tax authority.
Not every Real stablecoin is the same
How to use DePix through Depix.Online
Depix.Online is not a wallet
The main wallet options are Blockstream Green (the official wallet, easy for beginners) and SideSwap (a wallet with a built-in DEX).
Basic flow
- Create a Liquid wallet in Blockstream Green, SideSwap or another app.
- Copy your public address (it starts with
lq1q…). - Use that address when transacting through Depix.Online.
- Receive the DePix directly in that wallet.
- Your 12-word seed controls everything: you store it, you never share it.
Everything runs in self-custody: Depix.Online does not hold your keys, cannot freeze your wallet and does not custody your funds. To understand that model better, see how the platform's security works.
Receiving DePix through Depix.Online
When you sell something and receive a PIX payment through Depix.Online, the Reais come in via PIX, get converted to DePix 1:1 and land directly in your Liquid wallet (Blockstream Green, SideSwap or another). You control 100% of the balance.
Swapping between assets
When you want to swap DePix for USDT-Liquid (hedging against the Real losing value, for instance), use DepixSwap, a decentralised exchange for Liquid. The DePix ↔ USDT-Liquid swap is direct, with no intermediary, and nobody holds your key. It is all on-chain, pure self-custody: you sign the transaction from your own wallet.
Buying L-BTC or USDT-Liquid with PIX
You can buy through Brazilian platforms that offer crypto purchases with PIX. Limits vary per platform and fees are usually a 1 a 2% spread, with funds delivered straight to your Liquid wallet. From there you use the wallet to manage, swap or send to someone else.
What about the network fee (L-BTC)?
No L-BTC to pay the fee?
Liquid vs Lightning vs native Bitcoin
To decide which network to use in each situation:
| Situation | Best network | Why |
|---|---|---|
| Holding BTC for years | Bitcoin mainnet | Maximum security; worth paying a high fee once |
| Receiving a PIX payment as DePix | Liquid (DePix) | The only place DePix exists |
| Swapping DePix for USDT-Liquid | Liquid (DepixSwap) | Direct pair, no intermediary, same keys |
| Paying for coffee at a bar that takes BTC | Lightning | Instant payment, near-zero fee |
| Sending R$ 50 in crypto to a friend | Liquid (DePix) | Fast, cheap, no FX exposure |
| Long-term dollar savings | Liquid (USDT-Liquid) | Self-custody, no centralised exchange, confidential amounts |
| Moving R$ 100k to a foreign exchange | Liquid (L-BTC) | Fast, cheap, easy to convert |
- Lightning = BTC for small, instant payments
- Bitcoin mainnet = long-term reserve
- Liquid = everything involving daily use, multiple assets and privacy
Limitations and downsides
Liquid is not magic. The trade-offs are real, and worth knowing before you decide where to keep what.
1. Federated, not Proof of Work
Bitcoin is secure because anyone in the world can mine and validate blocks, maximum decentralisation. Liquid is different: more than 15 functionaries (servers operated by companies such as Blockstream, Bitfinex, BitMEX, OKX and Crypto Garage) sign the blocks. Any attack would require more than a third of them to collude. The list is public and auditable at blockstream.com/liquid.
It is not “decentralised like Bitcoin”, but it is not “centralised like a bank” either. It is a deliberate middle ground in exchange for speed and multiple assets.
2. Peg-out takes time
Moving L-BTC back to BTC mainnet (peg-out) takes around 2 hours and has to go through an exchange or authorised service, it is not instant. Peg-in (BTC → L-BTC), on the other hand, is just sending to a federation address and waiting.
3. Less third-party infrastructure
Bitcoin has dozens of wallets, hardware wallets and exchanges. Liquid has fewer: SideSwap and Blockstream Green are the main ones. Ledger and Trezor have support, but more limited.
4. Confidential Transactions have a computational cost
Each CT is larger in bytes than an equivalent Bitcoin transaction. That is why the fee, low as it is, is higher per byte than on mainnet. ELIP-200 cut this by 90%, but it still exists.
Critical warning: never send native BTC to a Liquid address
lq1q… address is lost. To move BTC onto Liquid, use a peg-in via Blockstream or buy L-BTC directly.Frequently asked questions
Practical summary
- Liquid is a Bitcoin sidechain: a parallel network run by a federation of more than 15 companies.
- 1-minute blocks, ~R$ 0.05 fees: with support for multiple assets (L-BTC, DePix, USDT-Liquid, L-CAD).
- Confidential Transactions: encrypt amount and asset, giving privacy without giving up auditability.
- DePix is a regulated Real stablecoin: Plebank (a regulated VASP), full KYC and AML, reported to the tax authority.
- Depix.Online is the Brazilian on-ramp: buy and sell DePix with PIX, receiving it in your Liquid wallet.
- The same seed holds Reais, Dollars and Bitcoin: at a single
lq1q…address. - DepixSwap is Liquid's DEX: swap DePix ↔ USDT-Liquid, with no intermediary and without handing over your keys.
- No L-BTC for the fee? Your Liquid wallet can use an automatic Gas Station.
- For long-term BTC holding, still prefer mainnet plus a hardware wallet.
- For daily use, Liquid is the choice.
Keep your seed safe
This content is educational and informational and does not constitute financial, legal or investment advice. Digital assets involve risk.
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