On July 17, 2026, KaleidoSwap achieved a remarkable milestone by enabling native RGB assets to function directly on Blockstream’s Liquid sidechain using just 207 lines of code. This innovation eliminates the need for a bridge, custodian, or major changes in architecture.
The breakthrough stems from a key discovery: both Bitcoin and Liquid utilize the same Taproot output format defined under BIP-341. This compatibility allowed the RGB protocol’s mechanism to integrate smoothly into Liquid.
KaleidoSwap's implementation demonstrates that it’s possible to run RGB assets on Liquid without altering the existing test suite of 45 tests. The only necessary addition was logic to interpret Liquid transactions instead of Bitcoin ones.
Importantly, the small code change, which consists of just 207 lines spread across seven files, passed all existing tests without any adjustments. This minor modification signifies that the RGB protocol was designed with enough flexibility to support networks beyond Bitcoin.
A real RGB20 asset was issued on Liquid, and a custodian-free atomic swap between RGB assets on both Bitcoin and Liquid was effectively demonstrated. This advancement highlights the growing capabilities of Liquid’s Simplicity smart contract language, which has been operational on the Liquid mainnet since July 2025.
The RGB patch for Liquid has been submitted as a Request for Comments (RFC) to the official RGB repository and is currently pending approval from the maintainers.
This development could reshape how assets are handled across different blockchains, leveraging the inherent compatibility between Bitcoin and Liquid.
This material is informational and not financial advice.
