The Liquid Federation announced Monday evening that reserves had been “fully restored, reestablishing 1:1 $BTC backing for all LBTC.” Liquid is a Bitcoin sidechain; its L-$BTC token is intended to represent bitcoin locked in federation reserves.
That compares with estimated coverage of 94.14% earlier on Nov. 2. The final transaction sent exactly 250 $BTC to an address listed in the federation wallet and was confirmed in Bitcoin block 974307.
In its incident assessment, Blockstream said the Sept. 6 exploit of Elements, the software underlying Liquid, created approximately 4,000 unbacked L-$BTC that was converted into bitcoin through peg-outs. It said 3,400 $BTC was returned on Sept. 7.
Swaps and Direct Withdrawals
Direct federation peg-outs withdraw $BTC from the network’s reserves and are available to authorized Peg-out Authorization Key holders. The recovery plan called for restoring full backing before their controlled reactivation.
Swapping through providers is a separate exit route. In its Oct. 27 update, the federation said users could exchange $BTC and L-$BTC at 1:1 through AQUA, Bull Bitcoin and SideSwap, while normal federation peg-out operations remained under “enhanced operational controls” as security hardening continued and an independent audit neared completion.
The Nov. 2 announcement confirms the reserves milestone but does not announce unrestricted direct peg-outs or completion of that audit. The recovery plan also makes restoration of normal peg-out functionality subject to completion of the remaining security and operational requirements.
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