How to use Bitcoin’s sidechain: peg-in, peg-out, and swaps.
TL;DR: The Liquid Network is a Bitcoin sidechain for faster, more confidential transactions and asset issuance. Bitcoin moves to Liquid through a peg-in (1 BTC = 1 L-BTC) and back through a peg-out; both can be done with the SideSwap app for a 0.1% fee, or you can swap directly between Bitcoin, Lightning and Liquid through Boltz from 0.1%. Liquid is a federated network: as of Q1 2026 the federation counts 87 members, with 15 functionaries signing blocks and securing the peg. The trade-off is clear: you gain speed (blocks roughly every minute) and confidential amounts, you give up the trustless model of Bitcoin’s base layer. Usage is growing: Liquid processed over 1.16 million transactions in Q1 2026, nearly five times the volume of Q1 2025.
What is the Liquid Network?
The Liquid Network is a Bitcoin sidechain that enables faster, more confidential transactions and the ability to issue tokenized assets. Blocks are produced roughly every minute, and confidential transactions hide amounts and asset types from outside observers by default.
Liquid is a federated network. As of the first quarter of 2026 the Liquid Federation counts 87 members across six continents, including exchanges, wallet developers and infrastructure companies. A subset of 15 members, the functionaries, runs the specialized servers that take turns signing blocks and securing the bitcoin locked in the federation’s multisig wallet. This design trades Bitcoin’s trustless model for speed and confidentiality: users of Liquid trust the federation not to collude.
When you move bitcoin to Liquid, it is converted to L-BTC (Liquid Bitcoin) at a 1:1 ratio. Network activity has grown sharply: Liquid processed 1,163,119 transactions in Q1 2026, nearly five times the 233,670 of Q1 2025, with 14,063 peg-ins (1,252 BTC) and 1,201 peg-outs (1,144 BTC) in the quarter.
What do you need to use Liquid?
To operate on the Liquid Network, you need wallets that support L-BTC and other Liquid assets. This guide uses:
- Blockstream app (formerly Blockstream Green): Blockstream’s multi-platform wallet with native Liquid support;
- SideSwap: a user-friendly app for Liquid operations, including peg-ins and peg-outs;
- Boltz: a non-custodial exchange service for swaps between Bitcoin, Lightning, Liquid and Rootstock.
How do you create a Liquid wallet?
Blockstream app (formerly Blockstream Green)
In the Blockstream app, start by creating a new wallet: generate the seed phrase, save it offline and confirm it. Once the wallet exists, add a Liquid account from the account management section, choosing Liquid Bitcoin as the asset. The app then manages both your Bitcoin and Liquid balances from the same interface.
SideSwap
To create a Liquid wallet on SideSwap, create a new wallet from the app’s start screen, save the seed phrase offline and confirm that you have stored it. The wallet is ready to receive L-BTC and other Liquid assets right away.
How does a peg-in work?
A peg-in transfers bitcoin from the main blockchain to the Liquid Network. In SideSwap:
- Open the peg-in/peg-out section of the app and choose Peg-in.
- Use the generated address to send on-chain bitcoin from an external wallet.
- Wait for the peg-in to complete: claiming pegged-in funds requires 102 confirmations on the Bitcoin blockchain, about 17 hours.
The cost for a peg-in/peg-out on SideSwap is 0.1%.
Once the peg-in is complete, you can check the L-BTC balance in the wallet’s assets section and send L-BTC to another wallet.
How does a peg-out work?
A peg-out converts L-BTC back to bitcoin on the main blockchain. In SideSwap:
- Open the peg-in/peg-out section and choose Peg-out.
- Enter the L-BTC amount and the on-chain Bitcoin address for receiving funds.
- Set fees and confirm the transaction.
When should you use a swap instead of a peg?
Unlike peg-ins, which lock on-chain bitcoin to mint L-BTC, swaps exchange existing on-chain bitcoin for L-BTC using liquidity already on the sidechain. Swaps are faster than peg-ins because there is no need to wait for the 102 confirmations (about 17 hours) required to claim pegged-in funds; the counterpart takes a fee for providing liquidity.
Through Boltz, you can swap across four networks:
- Bitcoin on-chain
- Lightning Network
- Liquid Network
- Rootstock
Boltz fees (2026):
- 0.1% to swap from Bitcoin on-chain or Liquid to Lightning;
- 0.25% from Lightning to Liquid or Rootstock;
- 0.5% from Lightning to Bitcoin on-chain;
plus network fees for locking and claiming funds.
As a rule of thumb: use a peg-in if you are moving a large amount and can wait for confirmations (the only cost is the 0.1% SideSwap service fee, or zero if you run your own Elements node); use a swap if you need L-BTC quickly or are moving between Lightning and Liquid.
What are the trade-offs of using Liquid?
- Trust model: L-BTC is a claim on bitcoin held in the federation’s multisig. You trust the functionaries (15 entities as of 2026) not to collude, a weaker assumption than holding bitcoin on the main chain.
- Confidentiality, not anonymity: confidential transactions hide amounts and asset types, but the transaction graph remains visible, and peg-ins/peg-outs are visible on the Bitcoin chain.
- Liquidity: peg-outs are processed by federation members, and L-BTC liquidity outside the network’s main venues can be thin compared to on-chain bitcoin.
- Ecosystem dependence: most user-facing tools (Blockstream app, SideSwap, Boltz, AMP assets) are developed by a small number of companies.
Frequently asked questions
What is the Liquid Network?
A Bitcoin sidechain launched by Blockstream and governed by a federation of 87 members (as of Q1 2026). It offers blocks roughly every minute, confidential transactions and asset issuance. Bitcoin moves in and out through a two-way peg at a 1:1 ratio with L-BTC.
Is L-BTC the same as bitcoin?
Functionally it represents bitcoin at a 1:1 ratio, but technically it is an IOU on the sidechain: the underlying bitcoin is held in a multisig wallet controlled by the federation’s functionaries. Redeeming L-BTC for BTC requires a peg-out or a swap.
How long does a peg-in take?
A peg-in requires 102 confirmations on the Bitcoin blockchain, about 17 hours, before L-BTC can be claimed. Swaps through services like Boltz or SideSwap are much faster because they use existing liquidity.
How much does it cost to move bitcoin to Liquid?
SideSwap charges 0.1% for its peg-in/peg-out service. Boltz swaps cost between 0.1% and 0.5% depending on direction, plus network fees. Running your own Elements node lets you peg-in without service fees.
Is the Liquid Network private?
More confidential than Bitcoin’s base layer: amounts and asset types are hidden by confidential transactions. Addresses and the transaction graph remain visible, and the federation model means it is not trustless.
What happened to Blockstream Green?
Blockstream redesigned and rebranded its Green wallet as the Blockstream app. It remains a non-custodial wallet with native support for Bitcoin and Liquid assets such as L-BTC and USDt.
