Liquidity Network is an off-chain scaling solution for existing blockchains. It aims to provide significant improvements for blockchain payments. Here’s our review.
What is Liquidity Network?
Liquidity Network claims to be a trillion transaction blockchain payment network. It’s a simple, scalable, secure blockchain payment network that can be implemented into existing blockchains to provide significant improvements.
The goal of Liquidity.Network is to reduce transaction costs across the blockchain industry, thereby encouraging mainstream adoption of blockchain.
What Problems Does Liquidity Network Seek to Solve?
Bitcoin and Ethereum’s blockchains are two of the largest and best-known blockchains on the market today. Despite their potential, however, these blockchains can only process several dozen transactions per second.
In comparison, mainstream payment platforms like Visa and MasterCard process thousands of transactions per second.
It’s no secret that scalability is a major problem in the blockchain world. One of the most frequently-suggested solutions is to implement an off-chain payment channel. Off-chain payment channels help avoid a blockchain’s processing restrictions.
Typical off-chain payment channels, however, face several limitations: users need to keep substantial deposits locked up, and payment channel rebalancing is limited to on-chain transactions. Off-chain payment channels also require the construction of complex routing structures.
Liquidity Network aims to solve all of these problems by creating a better off-chain payment channel solution.
How Does Liquidity Network Work?
Liquidity.Network aims to be the first practical, secure, and scalable off-chain payment hub system for decentralized blockchains. The Liquidity Network architecture comes from a connection between two platforms created by the team, including the Payment Hub and REVIVE. Through these two platforms, Liquidity Network is scalable to millions of users worldwide, and it does not require funds to be locked up.
Basically, Liquidity Network wants to solve the three core problems listed above, including:
Payment Channels Require Collateral to Be Locked Up for Every Channel
Today’s off-chain payment channels require collateral to be locked up. Liquidity.Network allows any member of a payment hub to pay any other member of a payment hub with the allocated funds.
Existing Payment Channels May Not Be Refilled Off-Chain
Liquidity.Network’s REVIVE platform solves this problem by allowing payment refunds off-chain. REVIVE lets users rebalance payment channels off-chain, avoiding the degradation of payment channels without costly on-chain transactions.
Routing complexity is a big issue with today’s off-channel payment solutions. Liquidity.Network solves this problem with simple routing designs, avoiding the complexities faced by Lightning and Raiden.
Ultimately, Liquidity Network’s platform revolves around interconnected hubs. Similar to traditional payment channels, two users of different payment hubs can perform off-chain payments across different interconnected payment hubs. REVIVE, meanwhile, allows an arbitrary set of users in a payment channel network to securely rebalance their channels based on the preferences of channel owners.
Liquidity Network Features
Liquidity Network emphasizes the following features:
Better Micro-Payments: Liquidity.Network enables micro-payments and small value transfers, or SVT, thanks to negligible transaction costs. This is the true vision of cryptocurrencies, but it’s something that has been lost as cryptocurrencies like bitcoin (BTC) have been unable to scale.
- Instant Payments: Liquidity.Network lets you send payments instantly with no waiting time.
- No Locked Funds: Allocated funds can be used to pay any other member of the Liquidity.Network.
- Simplicity: Simple design avoids complex routing.
- Transparency: All transactions and actions performed on the Liquidity.Network network are auditable.
- Privacy: Enhanced transaction privacy.
- Security: Payments are secured by the blockchain.
- No Bank Required: All payments are secured by the blockchain and owned by the member at any point.
- Flexible Fees: Fees are paid by either the sender or the recipient.
- Generic: Built on Ethereum and compatible with existing solutions like Lightning or Raiden.
Who’s Behind Liquidity Network?
Liquidity Network was created by a team of founding members with 5+ years of full-time blockchain experience. That team has expertise in computer science, security, mathematics, and formal methods. They’ve also worked at major companies like Intel and Facebook.
The team has been developing blockchain technologies since 2013. They started with academic work on double-spending, the privacy of lightweight bitcoin clients, and a comparison of security differences between blockchains.
The two founding members of the team include Dr. Arthur Gervais and Rami Kahlil.
The paper for Liquidity Network was published in the biggest academic IT security conference, CCS 2017. It’s built on peer-reviewed research. An alpha version of Liquidity.Network was launched in September 2017, with a public announcement of the project in November.
Liquidity Network Conclusion
Liquidity.Network is a proposed solution to the scaling problem faced by today’s blockchains. Off-chain payment channels have long been proposed as a scaling solution. However, today’s off-chain payment channels suffer from problems like routing complexity. Liquidity.Network solves these problems with simple routing designs. The solution avoids locked funds and other off-chain payment channel problems.
Overall, Liquidity.Network’s prototype is ready for implementation in Ethereum Classic. Other possible blockchains for the Liquidity Network include bitcoin, Dfinity, NEO, Nimiq, and Lisk.
To learn more about the project, visit online today at Liquidity.Network.