Blockstream has transferred 300 BTC into the Liquid Federation wallet, reducing the network’s reserve shortfall to 250 BTC. The deposit brings Liquid closer to full backing than at any point since a September exploit drained its reserves. Peg-out redemptions remain frozen until every L-BTC is matched by real Bitcoin.
The numbers behind the deposit
The transfer took place on November 2, 2026. Prior to the deposit, the gap between issued L-BTC and the Bitcoin held in reserve was approximately 550 BTC.
Following the deposit, the federation wallet holds 4,018.95 BTC, while 4,268.95 L-BTC remains in circulation. This results in a backing ratio of 94.14%, leaving the remaining 250 BTC still owed.
This follows an earlier test transaction of roughly 2.53 BTC on October 27, 2026, which served as part of the gradual effort to restore reserves.
Background on the September exploit
The shortfall originated on September 6, 2026, when attackers exploited vulnerabilities in Elements, the software underpinning the Liquid Network, and removed approximately 4,000 BTC.
Following negotiations, approximately 3,400 BTC was returned to the network. To address the remaining hole, Blockstream, led by CEO Adam Back, pledged to cover the shortfall internally.
Alongside the reserve recovery, external security audits were completed by October 20, 2026. Blockstream also implemented software upgrades and modified key management practices.
Impact on users and next steps
L-BTC holders currently cannot redeem their assets for native Bitcoin because peg-outs remain halted until the network achieves 100% reserve backing. Key milestones to watch include the deposit of the final 250 BTC and the eventual resumption of peg-out redemptions once full backing is reached.
