Preface
In this edition of the Layer 2 Report, we take a deep dive into the top projects on Liquid and the plans their teams have for 2023.
Despite a slowdown across the industry, Liquid has made significant progress in expanding its ecosystem. This is mainly due to the gradual maturity of projects that are under development. This article will highlight some of these projects and update the more mature projects on Liquid and their goals for 2023.
1. Blockstream
As a technical supporter of Liquid, Blockstream conducted in-depth development based on DynaFed in 2022 and further updated the Peg-out Authorization Key (PAK) and Blocksigners. DynaFed brings significant upgrades to the network, making Liquid's functionality more flexible and easier to add or remove, thus building a more stable sidechain system.
At the same time, Elements v22.0.2 has also been released, which ensures that Liquid's code is synchronized with Bitcoin Core 22.0 and has made a series of optimizations and improvements to DynaFed parameters. Currently, the team is evaluating Elements v22.1-rc1 and plans to release the full 22.1 version next month (so far, Elements has been updated to version 22.1.1), which will fully support Liquid Testnet. In addition, they are also preparing to migrate it to Bitcoin Core 24.0, which is expected to be completed later this year.
In October 2022, Blockstream wrote and published a white paper titled "Non-custodial Options with Elements". The paper delves into new scripts and opcodes that enable a variety of financial products on Liquid, such as non-custodial limit orders and fully collateralized options contracts. The team plans to release a reference implementation of these new options contracts in the near future.
Another Liquid project led by Blockstream is Build On L2 (BOL2). BOL2 is a one-stop community platform that will provide developer and business documentation, online hackathons, masterclasses, and other events for Bitcoin enthusiasts interested in building applications on Core Lightning and Liquid. BOL2 is scheduled to launch later this quarter.
2. Bitcoin Reserve
Bitcoin Reserve is a Bitcoin-only brokerage and member of the Liquid Alliance. Last year, it added an L-BTC purchase option to its platform. Customers can purchase L-BTC from as little as €10 to over €10 million via bank transfer and self-custody it in any Liquid wallet of their choice.
Since the announcement, Bitcoin Reserve has added an L-BTC selling option and expanded its services to Liquid USDT.
3. Bitmatrix
Bitmatrix is an AMM protocol built on Liquid that released its mainnet beta in Q4 2022, supporting trustless liquidity provision and custom LP fees between L-BTC, stablecoins and other assets.
According to Bitmatrix chief engineer Burak, multiple updates in the first half of 2023 will include providing users with more advanced price and analysis charts showing TVL, fees, earnings and other indicators. He also said that information panels for asset pairs are also planned, and their design will be similar to "CoinMarketCap for Liquid assets."
Looking ahead, Bitmatrix plans to use Simplicity to optimize network applications in 2024 to reduce transaction size and cost and enable multi-party pools. Currently, each pair of assets requires a separate pool to be deployed. For example, when trading X and Y, there must be a direct pool for XY. But under the multi-party pool design, you can trade X and Y indirectly; you only need to have a pool for X, LBTC and a pool for Y, LBTC.
4. DIGTL
DIGTL Markets (DIGTL) provides capital markets infrastructure that enables issuers to manage their digital securities and reach retail investors around the world in a compliant manner.
After joining the Liquid Alliance in early 2022, DIGTL subsequently provided technical support to BMN investors for MERJ Exchange and helped it to be listed and traded on the exchange, bringing more affordable prices and trading units to BMN investors around the world. According to Kyle Fry, co-founder and CEO of DIGTL, DIGTL plans to further expand its network of stock exchanges and work with large asset issuers, including a carbon offset project worth more than $1 billion, which will choose Liquid as its registration platform.
Additionally, DIGTL is a founding member of 1transfer, an SEC-registered transfer agent established to provide issuers on Liquid with the additional regulatory structure they need as part of its full-service platform.
5.Fuji Money
Fuji Money is a non-custodial, Bitcoin-only lending platform that allows users to borrow stablecoins and synthetic assets and trade peer-to-peer. Since its launch, Fuji has provided early closed beta access to the first 100 subscribers on the waiting list and successfully integrated Lightning’s submarine swap functionality.
FUJI USD (FUSD), a stablecoin pegged to the US dollar and backed by Bitcoin, will be the first Fuji synthetic asset available on the platform. Users can borrow FUSD by depositing Bitcoin into a Liquid smart contract (i.e., an agreed address), which can be done through a Lightning submarine swap or directly using L-BTC.
6. Raretoshi
Raretoshi is a physical and digital art marketplace built by Adam Soltys and his team using the open-source L-NFT protocol, designed to connect patrons with their favorite Bitcoin artists.
In 2022, Raretoshi brought new features to the platform, such as the ability to tip artists directly, switch between currencies, and leave comments on specific artworks. The biggest update is an encrypted messaging system that utilizes the Nostr protocol based on cryptographic keys.
7. SideSwap
SideSwap is a non-custodial wallet and decentralized exchange that allows users to enter and exit Liquid and perform instant, trustless swaps between L-BTC, USDt, and EURx. Assets like security tokens and voucher tokens, which cannot be atomically swapped, can be traded on decentralized order books. SideSwap is one of the easiest ways for newcomers to get L-BTC and quickly experience the benefits of Liquid.
As part of its regular UI update in 2022, SideSwap tokenized a certain amount of equity on the secondary market. Fifty thousand shares were reserved for the first users to register on its registration agent PEGx, some of which are still available now. Last quarter, SideSwap also enabled offline swaps by default in its wallet and order book, a major improvement to trading on the platform. Offline swaps are made possible by the new LiquiDEX protocol launched by Blockstream engineer Leonardo Comandini.
SideSwap founder Scott Millar has ambitious plans for 2023, including adding Fuji’s Bitcoin-backed FUSD stablecoin and synthetic assets (currently available on testnet) and integrating hardware wallets like Blockstream Jade so users can execute swaps directly from their signing devices.
8. STOKR
STOKR is an investment marketplace for alternative assets. After obtaining permission in the EU, asset managers and founders can conduct the first issuance of securities on the platform through Liquid. From business entrepreneurs to asset managers, STOKR provides a full set of technical deployment, investment structure, payment gateway and support for compliant digital securities issuance.
To date, over $60 million in assets have been tokenized on STOKR. In the past, STOKR provided issuance services for Exordium EXO tokens and Blockstream Mining Note (BMN), while vetting issuers and providing due diligence for investors.
STOKR has become the only digital securities issuance platform registered as a Virtual Asset Service Provider (VASP) by an EU member state. This honor was awarded by Luxembourg's financial regulator CSSF, giving the company a solid regulatory foundation in Europe.
Looking ahead to 2023, STOKR co-founder Arnab Naskar said the company will continue to focus on building capital market infrastructure and providing fundraising and tokenization solutions for small and medium-sized enterprises.
“We will be building more cutting-edge capital markets tools on the Liquid Network in 2023. Our focus will be on providing solutions for sophisticated asset managers and fund administrators who face liquidity issues in today’s markets. Get ready for a game-changing year”
One upcoming security token offering on Liquid is from Angelpreneur, a Swiss entity that invests in startups, helping them scale and develop successful franchise models.
9. Close
Zaprite is a platform that provides a range of self-hosted merchant tools such as invoicing, accounting and bookkeeping. The web application, currently in the MVP stage, allows users to connect their own nodes or wallets to get paid in Bitcoin, Lightning Network and Liquid.
In 2022, Zaprite officially became a member of the Liquid Alliance and added Liquid payment methods to its invoicing system. Entering the new year, Zaprite's founder and CEO John explained that the team will soon migrate its code base to integrate Liquid into its Checkouts feature in the new version.
Checkouts are highly customizable, branded pages hosted by Zaprite that allow users to accept payments with unique flows and information requests. Checkouts can be connected to your own website to create an instant e-commerce solution.
Zaprite will also develop new managed services such as point of sale, product stores, donation pages and ticket sales. These can be connected to existing Checkouts to provide merchants with a rich Bitcoin and Liquid payment processing experience.
references
1.Elements white paper article link: https://blockstream.com/assets/downloads/pdf/options-whitepaper.pdf?ref=blog.blockstream.com
2. Original link: https://blog.blockstream.com/liquid-ecosystem-update/
