The 'blockchain trilemma' refers to the challenge of balancing security, scalability, and decentralization in the design of blockchain systems. Bitcoin's base layer prioritizes security and decentralization but faces limitations in scalability.

To scale, Bitcoin relies on its second-layer protocols (i.e., Lightning, Liquid, and Fedimint), but each protocol also has unique trade-offs.

The Liquid team explains:

https://www.youtube.com/watch?v=i-3OLB2KR0A