Pedersen commitments are a cryptographic tool used in the Liquid Network's Confidential Transactions to conceal the amounts of an asset being transferred, while still being able to verify that the amounts are balanced within any particular transaction.

In other words, by employing Pedersen commitments, Liquid ensures that transaction participants can verify the validity of transactions without revealing sensitive financial data. This is done by ensuring that the sum of the output commitments equals the sum of the input commitments (plus any transaction fee as a commitment), proving that no new coins are created out of thin air.

An important distinction: Pederson commitments are used for hiding and proving possession of a value, while rangeproofs go a step further by proving that the hidden value is within a specified range. This extra step adds another layer of security and integrity to Confidential Transactions.