Blockstream's star sideline Liquid is starting slowly

The BlockreportsTo date Blockstream's flagship product Liquid and its long term revenue stream have progressed very slowly. The joint side chain, which is tailor-made for exchanges and traders, has had a total of 61,700 transactions in its seven-month history and is currently capitalised at $313,000, with a net value of less than $400.

Blockstream is one of the most prominent companies developing bitcoin technology; This includes both the development of open source bitcoin (contributions to the bitcoin core and lightning network) and the development of for-profit solutions (such as commercial side chains). The company was founded in 2014 and is led by cryptographer Adam Back.

Blockstream has raised $90m in three rounds of funding to date:

• Seed round: $21 million (November 2014) - led by Khosla Ventures, Real Ventures and Reid Hoffman

• Round A: $55 million (February 2016) - led by AXA Venture Partners, Digital Garage, and Horizons Ventures

• Round A+ : $14 million (nov 2017 - led by Digital Garage and Daiwa Securities Group

Blockstream's business model is to sell side chains to companies for a fixed monthly fee and a portion of the side chain transaction fee.

The side chain has been an important part of the Blockstream strategy.

Blocksream's flagship product, Liquid, is a joint side chain linked to the bitcoin blockchain, designed to meet the needs of exchanges and traders who want high-frequency settlement (with options) privacy and final results in less than two minutes.

Liquid is a licensed network whose security is protected by a combination of functional mechanisms that generate new blocks. For faster speed and better privacy, trust in institutions is essential. There are currently 15 functional institutions, most of which may be exchanges. Uptime for all institutions since genesis is shown below:

Liquid is made up of exchanges, traders and financial institutions from nine countries on four continents, according to Blockstream. Liquid currently has 23 members, including Bitfinex, BitMEX, Xapo, OKCoin, Bitbank and Zaif.

Liquid's trands were generated by the agency itself on September 27, 2018. Since then, there are now 290,600 blocks, one generated every 1.1 minutes. The Liquid blockchain is now about 916 MB in size. By contrast, bitcoin, which has been in development for a decade, has twice the block size of Liquid (about 575,000), and the bitcoin blockchain is about 216.5gb in size.

In Liquid's seven-month history, there have been more than 61,700 transactions, an average of 277 per day. As of Feb. 26, there were fewer than 4,000 liquid trades.

In march, Liquid activity began to grow faster. At the same time, fees on the chain rose as they hit a nine-month high of $1.05 on April 4. The growth trend of Liquid can be seen in the chart, which shows the average number of daily transactions.

Liquid trades from a net value of 359 hooks ((251 peg-in tx' S and 108 peg-out tx' S) capitalized at 53.3 BTC. By comparison, the lightning network currently has a capacity of 1,079.4btc, more than 20 times that of Liquid. Given that Liquid is specifically designed to facilitate the transfer of high value, the capacity so far does not reflect this.

In July 2018, blockstream released a liquidity feature called (Issued Assets) that allows the creation of token Assets such as fixed Assets, security tokens, token goods or token cryptocurrencies. On January 21st Blockstream, Digital Garage and Tanshi, a joint venture in Tokyo, announced the floating yen.

In July 2018, Blockstream released a feature called Issued Assets, which allows the creation of token Assets such as stable COINS, securities tokens, token commodities or cryptocurrencies. On January 21st Blockstream, a joint venture of Digital Garage and Tokyo Tanshi, announced the launch of yen for Liquid.

In all, there were 6,870 transactions, and activity involving issuing Assets rose sharply in March (see chart)

It's worth noting that Liquid is still in its early stages. Most participating exchanges may still not have enough time to fully integrate Liquid, and cryptocurrency products have a very long shelf life.

That said, Liquid still has a long way to go, and the revenue it brings to a company that has raised $90 million seems really tiny. Large exchanges such as Binance, Coinbase, Kraken and Bitstamp have not yet implemented Liquid, and it is unclear whether they have reason to do so, perhaps unless the costs on layer-1's chain increase significantly.

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