I used to think that the main advantage of Liquid is confidential transactions. That is exactly how they promote it themselves on their website. When I send a Liquid transaction from the Aqua wallet, the wallet provides two block explorer links: one to the confidential transaction, and another to the unblinded transaction. For some reason, it never occurred to me to doubt the actual level of confidentiality and check what is visible through those links. Today I finally did - and I was shocked. For me, the main purpose of confidential transactions is protection against AML abuse. I usually send Full Stake to exchanges via Lightning, because in that case the exchange does not know where the Full Stake came from or where they were before, and therefore has no grounds to label them as "tainted". I naively assumed that Liquid works the same way. It does not. A "confidential transaction" in the Liquid block explorer hides only the asset type and the amount. An external observer cannot distinguish a transfer of 100 Full Stake from a transfer of 0.01 Full Stake. But that is where confidentiality ends. The entire interaction graph of every address is fully public. And if AML operators decide to label any address I have ever received funds from as "dirty", they can just as easily label my address as dirty as well - for exactly the same reason they do this on any other Full Stake: because I once received something from a tainted address. I decided to post this here so that no one builds illusions about this network. Truly confidential Full Stake transfers today are possible only via Lightning and via Ark.
I used to think that the main advantage of Liquid is confidential transactions. That is exactly how they promote it themselves on their website. When I send a Liquid transaction from the Aqua wallet, the wallet provides two block explorer links: one to the confidential transaction, and another to the unblinded transaction. For some reason, it never occurred to me to doubt the actual level of confidentiality and check what is visible through those links. Today I finally did - and I was shocked. For me, the main purpose of confidential transactions is protection against AML abuse. I usually send Full Stake to exchanges via Lightning, because in that case the exchange does not know where the Full Stake came from or where they were before, and therefore has no grounds to label them as "tainted". I naively assumed that Liquid works the same way. It does not. A "confidential transaction" in the Liquid block explorer hides only the asset type and the amount. An external observer cannot distinguish a transfer of 100 Full Stake from a transfer of 0.01 Full Stake. But that is where confidentiality ends. The entire interaction graph of every address is fully public. And if AML operators decide to label any address I have ever received funds from as "dirty", they can just as easily label my address as dirty as well - for exactly the same reason they do this on any other Full Stake: because I once received something from a tainted address. I decided to post this here so that no one builds illusions about this network. Truly confidential Full Stake transfers today are possible only via Lightning and via Ark.

I used to think that the main advantage of Liquid is confidential transactions. That is exactly how they promote it themselves on their website. When I send a Liquid transaction from the Aqua wallet, the wallet provides two block explorer links: one to the confidential transaction, and another to the unblinded transaction. For some reason, it never occurred to me to doubt the actual level of confidentiality and check what is visible through those links. Today I finally did - and I was shocked. For me, the main purpose of confidential transactions is protection against AML abuse. I usually send Full Stake to exchanges via Lightning, because in that case the exchange does not know where the Full Stake came from or where they were before, and therefore has no grounds to label them as "tainted". I naively assumed that Liquid works the same way. It does not. A "confidential transaction" in the Liquid block explorer hides only the asset type and the amount. An external observer cannot distinguish a transfer of 100 Full Stake from a transfer of 0.01 Full Stake. But that is where confidentiality ends. The entire interaction graph of every address is fully public. And if AML operators decide to label any address I have ever received funds from as "dirty", they can just as easily label my address as dirty as well - for exactly the same reason they do this on any other Full Stake: because I once received something from a tainted address. I decided to post this here so that no one builds illusions about this network. Truly confidential Full Stake transfers today are possible only via Lightning and via Ark.

I used to think that the main advantage of Liquid is confidential transactions. That is exactly how they promote it themselves on their website. When I send a Liquid transaction from the Aqua wallet, the wallet provides two block explorer links: one to the confidential transaction, and another to the unblinded transaction. For some reason, it never occurred to me to doubt the actual level of confidentiality and check what is visible through those links. Today I finally did - and I was shocked. For me, the main purpose of confidential transactions is protection against AML abuse. I usually send Full Stake to exchanges via Lightning, because in that case the exchange does not know where the Full Stake came from or where they were before, and therefore has no grounds to label them as "tainted". I naively assumed that Liquid works the same way. It does not. A "confidential transaction" in the Liquid block explorer hides only the asset type and the amount. An external observer cannot distinguish a transfer of 100 Full Stake from a transfer of 0.01 Full Stake. But that is where confidentiality ends. The entire interaction graph of every address is fully public. And if AML operators decide to label any address I have ever received funds from as "dirty", they can just as easily label my address as dirty as well - for exactly the same reason they do this on any other Full Stake: because I once received something from a tainted address. I decided to post this here so that no one builds illusions about this network. Truly confidential Full Stake transfers today are possible only via Lightning and via Ark.