Heard about Liquid Network and got that look of "is it Bitcoin? not Bitcoin? altcoin?" — this article is for you. We will explain it without jargon, show why every DEPIX, Brazilian USDT and L-BTC transaction runs on this network, and why PixGo Wallet chose Liquid as its base. Without becoming an engineer: you leave understanding enough to use it safely.
- Liquid is a Bitcoin sidechain, not an L2 and not an altcoin: parallel network created by Blockstream in 2018
- 1-minute blocks (vs 10min on Bitcoin) and fee of a few sats per transaction, paid in L-BTC (ELIP-200 cut CT fee by ~90%)
- Supports multiple native assets: L-BTC (1:1 peg with BTC), DEPIX (stablecoin 1:1 with Real, issued by Eulen), USDT, L-CAD and dozens more
- Confidential Transactions: value and asset are encrypted on-chain — only sender, receiver and key holders can see
- Federated by 15+ functionaries from companies like Blockstream, Bitfinex and BitMEX — not Proof of Work
- PixGo Wallet uses Liquid natively: create wallet in 1 min, address
lq1q..., swap DEPIX↔USDT directly with the internal Swap
What is Liquid Network
Liquid is a Bitcoin sidechain. "Sidechain" means: a separate blockchain, with its own rules, but connected to Bitcoin via a mechanism that allows moving BTC between them (called a two-way peg). It is not a layer-2 (like Lightning) — it is an entire, complete, parallel blockchain.
It was created by Blockstream in 2018, specifically to solve problems that Bitcoin mainnet was not designed to solve: fast settlement between exchanges, stablecoin issuance, private transactions and multi-asset support. Today it is where DEPIX, Brazilian USDT, tokenized stocks, Canadian L-CAD and dozens of other assets run.
Most importantly: Liquid does not compete with Bitcoin. It complements it. Bitcoin is the vault. Liquid is the street where money circulates.
How it is "pegged" to Bitcoin
L-BTC (Liquid Bitcoin) is the "BTC inside Liquid". Every L-BTC in circulation has an equivalent amount of BTC locked in the federation. This is what is called a 1:1 peg: 1 L-BTC always equals 1 BTC, and anyone can swap back (peg-out). It is not collateral, not a "promise" — it is cryptographic proof that BTC is locked.
Want DePix in your wallet? You can buy it with PIX in PixGo Wallet.
See how to buy DePixWhy Liquid exists (vs Bitcoin mainnet)
Bitcoin mainnet is the most secure vault on the planet. But for buying coffee, sending 50 reais or daily commerce, it has 3 problems:
| Criterion | Bitcoin mainnet | Liquid Network |
|---|---|---|
| Block time | ~10 minutes | 1 minute |
| Fee per transaction | R$0.30 to R$30+ (varies) | A few sats (in L-BTC) |
| Value privacy | Public to everyone | Confidential (sender/receiver only) |
| Supports other assets? | No (BTC only) | Yes (DEPIX, USDT, L-CAD, etc) |
| "Final" confirmation | 3-6 blocks (~60min) | 2 blocks (~2min) |
| Security model | Proof of Work (max) | Federation (15+ functionaries) |
| When to use | Long HODL, reserve | Daily use, commerce, swap |
Same logic as "gold in vault" vs "money in wallet": nobody buys bread in the morning with a gold ingot. Bitcoin mainnet is the gold. Liquid is the wallet.
Confidential Transactions explained simply
Imagine every Bitcoin transaction is a transparent check: anyone can see who sent to whom, and how much. That is good for auditing, but terrible for privacy — if you receive salary in BTC, everyone with your address knows your salary.
On Liquid, this is different. Confidential Transactions (CT) encrypt two data points on the blockchain:
- The value: whether you sent 10 or 10,000 DEPIX is not exposed on the public blockchain
- The asset: whether you sent DEPIX, USDT or L-BTC is not exposed on the public blockchain
What remains public: the addresses involved and the fact that a transaction occurred. It is a middle ground between confidentiality and full transparency (Bitcoin). Enough to protect your balance and spending pattern, without granting anonymity — authorized auditors can still see when needed (with your view key).
Who unlocked this model? Adam Back and the Blockstream team, using a technique called Pedersen Commitments. In 2024, the ELIP-200 upgrade improved it further: reduced CT transaction cost from ~400 sats to ~53 sats — 90% savings.
Assets on Liquid
Liquid does not run only "Liquid Bitcoin". It is an asset issuance platform. Any authorized entity can issue an asset, and the network validates it just like L-BTC. The main ones:
| Asset | Backing | Issuer | Typical use |
|---|---|---|---|
| L-BTC | 1:1 with BTC | Liquid Federation | Fast, cheap BTC transactions |
| DEPIX | 1:1 with Real (BRL) | Eulen (DePix issuer in Brazil) | PIX payments, sales, receiving |
| USDT | 1:1 with Dollar | Tether | Store of value, swap |
| L-CAD | 1:1 with Canadian Dollar | Bull Bitcoin | Canadian market |
| EXOR-EQTY | Tokenized equity | Exordium | Capital markets |
What this means for you: a single Liquid wallet holds Real, Dollar and Bitcoin at the same time, with the same 12-word seed, on the same lq1q... address. No need to open accounts in 3 different places.
How to use Liquid (via PixGo Wallet)
The simplest way to start using Liquid in Brazil is through PixGo Wallet. In 1 minute:
- Open wallet.pixgo.org in browser (or download the APK from the Android button on the wallet.pixgo.org home page)
- Click Create Free Wallet and then Generate My Wallet
- Wallet shows 12 recovery words — write them on paper BEFORE continuing
- Set a strong password (8+ characters with uppercase, number and symbol, or 12+ characters with two of those three)
- Check "I saved my recovery phrase…" and click Save and Continue
- Done: you have a Liquid wallet with its own address
lq1q...(in My Wallet → Networks → Liquid → Receive)
This address can receive DEPIX (from PIX sales), USDT (from those paying in dollars) or L-BTC (from those paying in Bitcoin). All in the same wallet, with the same seed.
Full step-by-step in the guide PixGo Wallet from zero — complete first steps.
Swap between assets: internal Swap
When you want to swap DEPIX for USDT (to keep part in dollars, for example), PixGo Wallet has the internal Swap: on the Liquid network, it uses the SideSwap market and does a direct DEPIX↔USDT swap without an L-BTC intermediary. To take USDT to other networks (Tron, Polygon etc.), the same button uses BrSwap.
All on-chain, no PixGo custody. You sign the transaction locally, the wallet just provides the interface.
Buy L-BTC or USDT with PIX
Directly through the wallet, no need to leave for an exchange. Buy Crypto buys USDT, BTC or L-BTC with PIX, R$500/day limit, fee shown on screen before confirming. Details in Buy Crypto on PixGo Wallet.
What about L-BTC for fees?
Every Liquid transaction needs a pinch of L-BTC to pay the network fee (a few sats). If you have never bought L-BTC and only have DEPIX, use the Gas Station: the Liquid network screen shows "You need L-BTC" with the Buy Gas button — tap it and confirm, and it buys a micro-amount of L-BTC for you (paid with USDt if you have balance, otherwise with DEPIX). Details in Liquid Gas Station.
Liquid vs Lightning vs native Bitcoin
To decide which network to use in each situation, use this ruler:
| Situation | Best network | Why |
|---|---|---|
| Hold BTC for years | Bitcoin mainnet | Max security, fee paid once is worth it |
| Receive PIX payment in DEPIX | Liquid (DEPIX) | Only place where DEPIX exists |
| Swap DEPIX for USDT | Liquid (internal Swap) | Direct pair (no L-BTC in between), same keys |
| Pay for coffee at a bar accepting BTC | Lightning | Instant payment, zero fee |
| Send 50 reais in crypto to a friend | Liquid (DEPIX) | Fast, cheap, no exchange-rate exposure |
| Long dollar store-of-value | Liquid (USDT) | Self-custody, no CEX, confidential value |
| Move R$100k to a foreign exchange | Liquid (L-BTC) | Fast, cheap, easy to convert |
Summary: Lightning is for BTC in small instant payments. Bitcoin mainnet is for long-term reserve. Liquid is for everything involving daily use, multiple assets and privacy.
Liquid limitations and trade-offs
Liquid is not magic. The trade-offs:
1. Federated, not Proof of Work
Bitcoin is secure because anyone in the world can mine and validate blocks — maximum decentralization. Liquid is different: 15+ functionaries (employees of companies like Blockstream, Bitfinex, BitMEX, OKX, Crypto Garage) operate servers that sign blocks. For any attack, more than 1/3 of them would have to conspire.
The list is public and auditable: blockstream.com/liquid. It is not "decentralized like Bitcoin", but it is also not "centralized like a bank". It is a conscious middle ground in exchange for speed and multi-asset.
2. Peg-out is slow
Moving L-BTC back to BTC mainnet (peg-out) takes ~2 hours and must go through an authorized exchange or service. Not instant. For peg-in (BTC → L-BTC), just send to a federation address and wait.
3. Less third-party infrastructure
Bitcoin has dozens of wallets, hardware wallets, exchanges. Liquid has fewer: PixGo Wallet, SideSwap, Blockstream Green, Sparrow are the main ones. Ledger and Trezor have support, but more limited. In Brazil specifically, PixGo Wallet is the simplest path.
4. Confidential Transactions have a computational cost
Each CT is larger in bytes than an equivalent Bitcoin transaction. Therefore the fee, while low, is higher per byte than mainnet. With ELIP-200 this dropped 90%, but it still exists.
lq1q...). They are different networks. BTC sent to a Liquid address is LOST. To move BTC to Liquid, use peg-in via Blockstream or buy L-BTC directly with Buy Crypto in PixGo Wallet.FAQ — Liquid Network
Is Liquid an L2 of Bitcoin?
Not technically. L2 (layer-2) like Lightning runs "on top" of Bitcoin without needing its own blockchain. Liquid is a sidechain: a complete blockchain, with its own nodes, its own block production (federated), its own consensus. Connected to Bitcoin via peg, but operationally independent. Some people informally call it L2, but technically it is a different category.
Can I buy L-BTC with PIX directly?
Yes. In PixGo Wallet, go to Buy Crypto and select L-BTC as the asset. Payment via PIX, received directly in your self-custody wallet, R$500/day limit.
Is it safe to store money on Liquid?
Yes, with caveats: 15+ functionaries would need to conspire to attack (an expensive and detectable attack). For small and medium amounts (up to tens of thousands), Liquid is safe and practical. For long-term reserves of hundreds of thousands in BTC, we still recommend peg-out to native Bitcoin + hardware wallet.
Is PixGo the owner of Liquid Network?
No. Liquid is operated by a federation of 15+ companies (Blockstream, Bitfinex, BitMEX, etc). PixGo is just a company that uses Liquid to offer PIX + DEPIX services. The PixGo wallet is self-custody: nobody at PixGo has your keys, nobody can freeze your wallet.
What happens if the Liquid federation dies?
In an extreme scenario (federation 100% offline for months), L-BTC can still be redeemed via Blockstream's emergency mechanism. Assets like DEPIX would continue to exist on-chain but would depend on Eulen for redemption in Real. Low risk, but it exists.
Does Liquid have mining? Can I mine?
Not in the traditional sense. Blocks are produced by functionaries on rotation. There is no block reward, no open "miners". Who signs is technically configured in the federation.
Can I use Liquid without PixGo Wallet?
Yes. SideSwap and Blockstream Green are also Liquid wallets. PixGo Wallet is just our interface (with extras like integrated Swap, Gas Station (Buy Gas button) and Buy Crypto via PIX). The seed generated in PixGo is compatible: you can import it in any Liquid wallet if you want, and vice versa.
Practical summary
- Liquid is a Bitcoin sidechain, not L2 nor altcoin — parallel network operated by 15+ company federation
- 1-minute blocks, fee of a few sats, supports multiple assets (L-BTC, DEPIX, USDT, L-CAD)
- Confidential Transactions encrypt value and asset — privacy without losing auditability
- DEPIX is the Real stablecoin issued by Eulen (1:1 with the Real)
- PixGo Wallet is the Brazilian gateway: create in 1 min at wallet.pixgo.org
- Same seed holds Real, Dollar and Bitcoin — single
lq1q...address - The wallet internal Swap does a direct DEPIX↔USDT pair on Liquid, no L-BTC in between
- No L-BTC for fee? Buy Gas button (Gas Station) on the Liquid network screen
- For long BTC HODL, still prefer mainnet + hardware wallet. For daily use, Liquid
- NEVER send mainnet BTC to a Liquid address — different networks, funds lost
Related reading: PixGo Wallet from zero · Liquid Gas Station · Buy Crypto on Wallet · How D+1 works
