Summary
The Liquid Federation has announced that the network's bitcoin reserves have been fully restored and that every L-BTC is again fully backed by bitcoin. Per liquid.network on the morning of 3 November 2026, 4,270.54 L-BTC is in circulation against 4,270.54 BTC in the Federation reserve. Every L-BTC on the network again has a bitcoin behind it, one to one, as it did before 6 September.
Peg-in and peg-out through SideSwap are both open, peg-in since 11 September and peg-out since 20 October, one to one less our standard fee of 0.1 percent. The Federation's own peg-outs are not yet back, and until they are our payouts come from our own Bitcoin wallet, which we refill by hand. That can mean a wait. Details below.
What has happened
On 6 September a flaw in the Elements software let a party create about 4,000 L-BTC from nothing and take them out of the network as bitcoin through our peg-out service. Our statement of 9 September is our account of that day and of our part in it, and we stand by it.
Of the roughly 3,996 BTC that left the Federation, 3,400 BTC was returned on 7 September. Blockstream's assessment of 23 September put the amount still outstanding at about 602 BTC. On 10 September Blockstream's CEO Adam Back said publicly that the L-BTC to BTC peg would be covered one to one and that peg-in and peg-out would return in a later step.
That commitment has now been met. The reserve was rebuilt in steps that anyone can see on the Bitcoin chain, 2.5 BTC on 27 October, 50 BTC on 28 October, and on 2 November 300 BTC and then 250 BTC into the Federation's peg wallet, which took the reserve level with circulation. Where the bitcoin came from is for the Federation to say, and we refer readers to its announcement rather than add to it.
We thank Blockstream, the Liquid Federation and its members for seeing this through, and the Liquid community for its patience since September.
What it means for L-BTC
L-BTC is bitcoin on Liquid. Before 6 September every L-BTC in circulation was matched by a bitcoin in the Federation's reserve, and from today that is the case again. Both figures are public and live on liquid.network, the amount of L-BTC in circulation and the amount of bitcoin in the reserve, and anyone can check them at any time. Anyone running a Liquid node can verify the Federation's proof of reserves directly.
Wallets, keys and balances were never involved in the incident and are unaffected. Other assets on Liquid, including USDt and DePix, are issued and backed by their own issuers and were not affected. Network fees continue to be paid in L-BTC.
Peg-in and peg-out at SideSwap
Peg-in works as it always has. The ratio is one to one, and for every 1 BTC you send, 1 L-BTC less our standard fee of 0.1 percent is credited to your Liquid wallet. Peg in from the SideSwap app or from sideswap.io/peg-in-out, where the terms of the service are shown.
Peg-out through SideSwap has been open since 20 October. You send L-BTC and receive bitcoin, one to one less our standard fee of 0.1 percent, the same fee as peg-in, from the app or from the same page. What has changed since 6 September is behind the service, as we set out on 20 October. The Federation's own peg-outs remain restricted for now, so every payout comes from SideSwap's own Bitcoin wallet, and the L-BTC we take in is exchanged for bitcoin in bulk under the arrangement the Liquid Network has described.
That wallet is refilled by hand, and a refill is not instant. There will be times when the wallet runs low and peg-outs wait in the queue until the next refill lands. A peg-out that waits is not lost. It is paid in the order it arrived as soon as the wallet is topped up, and nothing is required of you. We know the waiting is frustrating, and we would rather tell you plainly that it can happen than promise a timing we cannot keep.
The road from here to full peg functionality, meaning the Federation's own peg-outs, is the Federation's to set out, and we do not know its timing. The Liquid Network has said that peg-outs return once the remaining security and operational requirements are met, and the Federation said on 27 October that the independent security audit was nearing completion. When the Federation's peg-outs return, our service carries on as it is and the bulk exchanges give way to peg-outs behind it. Until then, the flow described above is how peg-out at SideSwap works.
SideSwap's markets have been open since 10 September. They are open order books, and the price of L-BTC against USDt on them is whatever buyers and sellers agree. We do not set it and we do not peg it.
Practical points
Nothing is required of users. SideSwap is non custodial, and wallets, keys and balances are unaffected. If your peg-out is waiting in the queue, it will be paid when the next refill lands. If a peg-in or peg-out has not completed and you want to know where it stands, email [email protected] with the order number or the transaction id.
What comes next
The Federation has said that more on its next steps, including changes to its governance and additional safeguards, will be shared in the coming weeks. We will post updates on x.com/side_swap and t.me/SideSwap_io as the Federation's peg-outs return, and we will publish what has changed in our own service once the security changes behind it are complete. We will not comment on the recovery efforts or on who was behind the incident beyond what the Liquid Network and Blockstream publish.
About SideSwap
SideSwap is a non custodial exchange and wallet built on the Liquid Network, focused on atomic swaps, self custody, and open blockchain based capital markets rooted in Bitcoin.
Inquiries: [email protected]
Earlier notes: peg-out update, 21 October, peg-out is open again, 20 October, statement of 9 September