By
Steve Muchoki
May 6th, 2024
In a bid to provision digital currency traders with an ample means to manage all of their assets from a single wallet, an upgraded version of the number one stablecoin – Tether, would be launched on Blockstream’s Liquid Sidechain Network.
Being a pioneer of the first Bitcoin Liquid Network, Blockstream has gone further to list not just any stablecoin but an advanced version of the most widely used stablecoin – Tether. With this new inclusion into Blockstream’s ecosystem Bitcoin traders would gain access to neoteric features that were are not naturally made available on the Tether platform.
Verifying what the Liquid Network Sidechain would provision, Blockstream’s CSO Samson Mow stated:
“This will bolster the bitcoin ecosystem because you can trade more securely and rapidly.
The addition of Tether is a major milestone in increasing the utility of the Liquid Network. In combination with the latest developments in the Liquid ecosystem, traders can now achieve some really cool things, such as OTC atomic swaps, super-fast arbitrage between exchanges, and easy Tether custody with Blockstream Green.”
The integration of Tether onto the Blockstream’s Sidechain Network has attracted industry participants such as Tether’s affiliate exchange platform – Bitfinex, so as to aid manage and transact with the network using the Bitcoin-pegged Token “L-BTC”.
The Blockstream Liquid Sidechain
Conventionally Bitcoin runs on a reduced throughput as well as a very low transaction speed of about 4.6 transactions per second. Therefore the creation of a Bitcoin Sidechain Network also referred to as ‘Liquid Network’ was designed to bootstrap and catalyze the execution of large volumes of transactions at lightning speed, hence the nickname ‘Lightning Network’.
In a statement released by the CTO of Bitfinex – Paolo Ardoino, he specifies the need for a Sidechain as asserting:
“If there’s one thing our traders need, it’s speed. Liquid delivers that in spades. Liquid’s instant settlements will allow our traders to achieve faster bitcoin deposits and withdrawals, more efficient arbitrage, and even better pricing through tighter spreads.”
Lightning on bitcoin on liquid (L-BTC). Bitcoin layers connecting and converging! (People may not know that Lightning can bridge multiple networks). https://t.co/E2Qm9oIuij
— Adam Back (@adam3us) July 2, 2019
A Tether-Based Bitcoin Sidechain
From a technical point of view the Sidechain works in semblance to a digital pseudo-scientific process, whereas an exchange converts it’s Bitcoin to Blockstream’s Liquid Bitcoin Token – “L-BTC”. The Liquid Bitcoin, originally pegged to the actual Bitcoin, can now accord the seamless transmutation of assets between Bitcoin and stablecoin much faster.
Another notable advantage of adding Tether into the network is to ensure a reduced counter-party risk for investors involved in OTC (Over-The-Counter) trades by means of atomic swaps between Liquid BTC and Liquid Tether. Just as the Liquid network ships in with a faster block (hashing) time, it provisions traders with the resources to rapidly initiate the transference of fiat between multiple exchanges at lightning speed, thus bringing about an efficient arbitrage trading ecosystem.
With this integration, the Liquid Network partner companies which include 23 Bitcoin companies (exchanges, brokers and other institutions) would help manage the sidechain, as well as use the Liquid USDT to make such transactions as deposits and withdrawals.