Liquid uses a consortium of functionaries (the Liquid Federation) to create blocks, anchoring Bitcoin funds on the main chain and issuing L-BTC tokens on the sidechain. Transactions on Liquid settle quickly (one-minute blocks), and Confidential Transactions hide amounts while maintaining full validation of inputs and outputs. Though it improves speed and privacy compared to mainnet, Liquid is more centralized—participants must trust that the federation won’t collude or fail. Still, it’s used by some exchanges, OTC desks, and traders seeking rapid transfers and confidential balances without sacrificing mainnet’s core security.