Liquid restores 1:1 Bitcoin backing, but wallet refills remain manual

The Liquid Network's Bitcoin reserve again fully backs L-BTC, its Bitcoin-linked token, swap provider SideSwap said Nov. 3.

Direct withdrawals from the Liquid Federation remain restricted, leaving SideSwap's customers dependent on the provider's own Bitcoin wallet for payouts.

In its Nov. 3 update, the swap provider cited 4,270.54 L-BTC in circulation against 4,270.54 BTC in the reserve managed by the Liquid Federation that morning. Those equal balances restore one Bitcoin of reserve backing for each L-BTC, according to SideSwap.

The company identified deposits of 300 BTC and 250 BTC on Nov. 2 among the transfers that brought the reserve level with circulation.

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.

Why holders can still wait for Bitcoin

SideSwap says its L-BTC-to-BTC service has been open since Oct. 20, and holders can 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.

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.

Liquid is fully backed. Payouts still use SideSwap's wallet.

SideSwap reports equal reserve and circulation balances. Its customer conversion route still depends on manually replenished Bitcoin inventory.

Restored backing and immediate payout capacity are separate: a SideSwap order may wait for its next wallet refill.

• SideSwap reported on Nov. 3, 2026 that Liquid's Bitcoin reserve again fully backed L-BTC, citing morning figures of 4,270.54 L-BTC in circulation and 4,270.54 BTC in the Federation reserve. SideSwap operational update, Nov. 3, 2026
• SideSwap says its L-BTC-to-BTC peg-out service has been open since Oct. 20 at one-to-one less its standard 0.1% fee, while direct Federation peg-outs remain restricted. SideSwap operational update, Nov. 3, 2026 Federation recovery plan, Oct. 20, 2026
• Until Federation peg-outs return, SideSwap says it pays customers from its own Bitcoin wallet and exchanges received L-BTC for Bitcoin in bulk. SideSwap operational update, Nov. 3, 2026
• SideSwap says its payout wallet is refilled manually, so orders can queue when funds run low; it says queued orders are paid in arrival order after a refill and gives no guaranteed completion time. SideSwap operational update, Nov. 3, 2026
• The Liquid 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. Federation recovery plan, Oct. 20, 2026
• SideSwap's Nov. 3 update said it did not know when Federation peg-outs would resume; restored backing therefore does not itself establish completion of the withdrawal recovery. SideSwap operational update, Nov. 3, 2026 Federation recovery plan, Oct. 20, 2026

Reserve figures are SideSwap's Nov. 3 morning report. Wallet funding states are conditional illustrations, not a live service indicator. The Federation restart date and payout waiting time are unknown.

Method: Reported equal morning balances are shown with equal bar lengths. The payout diagrams show source-described conditional wallet states, not live balances, measured transfer volumes or elapsed time. No arithmetic or forecast is added.

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 Oct. 20 plan put restoration of full 1:1 backing before controlled reactivation of peg-outs for authorized holders of peg-out authorization keys, known as PAK keys. Resumption remains subject to security and operational requirements.

SideSwap says it does not know when Federation peg-outs will resume. The Federation's remaining recovery milestone is to complete those requirements and restart its controlled withdrawal route.

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