Why LBTC adoption remained slow despite six new additions to federation governing Blockstream

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Six famous crypto corporations have joined the Blockstream Liquid sidechain federation.

Blockstream also welcomed six more participants of the Liquid-ruling federation, the Bitcoin sidechain for the inter-exchange settlement network.

Six latest members of the Liquid Federation include Bitcoin online wallet Coinos, crypto custodian Komainu, network privacy firm Nym, blockchain creation firm Vulpem Projects, broker Monitor Money, and Liquid Network settlement site Sideswap.

Liquid was revealed at the end of 2015 as a bitcoin sidechain intended to speed up the settlement of bitcoin trades for crypto exchanges. Liquid supports LBTC tokens that are connected to Bitcoin. According to official statistics, LBTC currently conducts 2,756 transactions, with the sidechain handling approximately 540 transactions per day.

The Liquid Federation currently has 59 participants, including the top cryptocurrency exchanges Bitfinex, OKEx, BitMEX, and Huobi, the trading product supplier CoinShares, and the hardware wallet company Ledger. In spite of the federation’s increasing membership, Liquid’s volume and TVL are dwarfed by the tokenized Bitcoin on Ethereum—with the Q3 2020 DeFi boom generating substantial demand for tokenized Bitcoin.

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According to btconethereum.com, there are currently more than 148,000 BTCs on the Ethereum network, worth more than $5 billion combined. As such, the value of Bitcoin on Liquid is equivalent to just 1.86 percent of all Bitcoin tokenized on Ethereum.

With much of the availability of tokenized BTC on Ethereum being used by institutional holders to access DeFi protocols, direct comparisons with LBTC could be troublesome due to the small number of consumers and Liquid token implementations.

Although Blockstream has acclaimed its Lightning Network sidechain for fast peer-to-peer transactions, Lightning’s adoption has also been dominated by Ethereum-powered BTC tokens over the past month.

About 1,060 BTC have been locked on the Lightning Network according to bitcoinvisiuals.com—equivalent to less than one-hundredth of the Bitcoin locked on the Ethereum.

With Ethereum-powered BTC tokens comprising 40 times the combined TVL of Blockstream’s two flagship sidechains, it appears that more of the crypto world is preferring to use the Ethereum network over Blockstream’s consolidated sidechains to increase the speed and scalability of BTC.

Three quarters of tokenized BTC on Ethereum were stuck in the Wrapped Bitcoin protocol, led by 12 percent HBTC and almost 9 percent renBTC.

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