SideSwap reported on Nov. 3 that the Liquid Network's Bitcoin reserve again fully backs L-BTC, its Bitcoin-linked token, with 4,270.54 L-BTC in circulation against 4,270.54 BTC in the reserve managed by the Liquid Federation. The equal balances restore one Bitcoin of reserve backing for each L-BTC, according to the swap provider.
The restoration follows the Sept. 6 incident in which an Elements software flaw allowed about 4,000 unbacked L-BTC to be created and converted into Bitcoin through SideSwap's service, according to the provider. SideSwap identified deposits of 300 BTC and 250 BTC on Nov. 2 among the transfers that brought the reserve level with circulation.
Customer conversions open, but Federation peg-outs restricted
SideSwap says its L-BTC-to-BTC service has been open since Oct. 20, allowing holders to send L-BTC and receive Bitcoin at a one-to-one rate, minus the provider's standard 0.1% fee. That customer conversion route remains separate from direct Federation peg-outs, the mechanism for releasing Bitcoin from the network's reserve.
Direct withdrawals from the Liquid Federation remain restricted, with no confirmed restart date. The Federation's Oct. 20 recovery plan placed restoration of full 1:1 backing before controlled reactivation of direct peg-outs for authorized PAK key holders, subject to remaining security and operational requirements. SideSwap said it does not know when Federation peg-outs will resume.
Payouts depend on SideSwap's wallet and manual refills
Until Federation peg-outs return, SideSwap says every customer payout comes from its own Bitcoin wallet, and that it exchanges the L-BTC it receives for Bitcoin in bulk. When the wallet runs low, orders can sit in a queue until the next refill arrives. SideSwap says it pays those orders in arrival order after replenishment and does not give a guaranteed completion time.
Restored reserve backing does not guarantee that the provider has enough Bitcoin immediately available to pay every conversion request, since a payout can still wait for the next wallet refill. The Federation's remaining recovery milestone is to complete security and operational requirements and restart its controlled withdrawal route.
