Blockstream has released version 5.1.4 of its self-custodial wallet application, adding support for direct swaps between the Lightning Network and the Liquid sidechain. 

The update allows users to send and receive Lightning payments using Liquid Bitcoin (LBTC) balances without operating Lightning payment channels.

The swap functionality is powered by Boltz, a non-custodial Bitcoin bridge that facilitates atomic swaps between different Bitcoin layers. Boltz provides the technical infrastructure enabling interoperability between Lightning and Liquid.

With the update, users can pay Lightning invoices directly from their LBTC balance and receive Lightning payments that are credited to Liquid. 

The swaps rely on cryptographic hash time-locked contracts (HTLCs), which ensure that transactions either complete in full or are automatically refunded. At no point does a third party take custody of user funds.

Blockstream characterized the update as part of its broader product development strategy. In a statement included with the release, the company said:

“We’re building the all-in-one Bitcoin experience.”

According to the company, the integration allows access to Lightning’s payment network without requiring users to manage channels or inbound liquidity. 

Liquid acts as an intermediary settlement layer, allowing users to access Lightning functionality while postponing potential on-chain transaction fees.

The update also introduces additional options for UTXO and liquidity management. Users can withdraw funds from exchanges via Lightning, receive the funds into a Liquid balance, and later move those funds to the Bitcoin main chain for cold storage. 

Liquid’s confidential transaction model limits public visibility into transaction amounts and balances.

Blockstream also confirmed that on-chain Bitcoin swap functionality is planned for a future update. 

Once implemented, users will be able to swap between Lightning, Liquid, and on-chain Bitcoin within the app. 

This is expected to allow movement of funds between cold storage and both Layer 2 networks without routing through centralized exchanges.

The Lightning–Liquid swap feature is now available in version 5.1.4 of the Blockstream app. On-chain swapping has not yet been released and remains under development.

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