In efforts to support the Bitcoin scaling agreement, the Blockchain Association of Canada has launched a sidechain project: Liquid Networks. The project is based in Ottawa and founded by Samson Mow of Blockstream and Joseph Weinberg of Paycase
The Liquid Network, a sidechain network, aims to optimize transactions with agility and swiftness.
Sidechains like Liquid Networks have the capabilities to perform real-time audits while offering a secure protocol with an option of impenetrable, secure tokens all of which can be comfortably used over the open internet.
Optimized financial transactions
Mow further explains the concept:
"Sidechains allow for new innovations in security models and features, plus the added benefit of faster and more cost efficient transactions -- if more businesses were utilizing sidechains for cases involving recurring transactions, they would take some pressure off the main Bitcoin blockchain."
According to Paycase CEO Joseph Weinberg, they have been working with enterprises in finance and other institutions to explore possibilities that will essentially leverage a strong federation.
"We are also working on other sidechain initiatives that leverage strong federations and confidential assets via the elements project, both in Canada and globally, that require multi-participant governance guarantees and explicit trust."
For it to operate successfully, Liquid Networks requires definitive trust from a group of parties and government assurances, whereby rules and regulations are adhered to, which includes a participant network for consensus.
While expediting Bitcoin trading, the system is claimed to act as a “trustless” exchange for its users.
While the idea of sidechain projects have existed for some time, their new focus extends to the decentralization of trust into other sectors and digital assets.
Apart from its lofty ideals, it is a classic example of principles that are good in theory, yet do not equate in practice.
Similar projects, such as Pegged Sidechains by BlockStream, claimed to “enable Bitcoins and other ledger assets to be transferred between multiple Blockchains”. However, it still needs the right mental model for it to fully work.