Liquid Reserve Gap Falls to 550 BTC After 50 BTC Transfer

Liquid's federation wallet received another 50 $BTC on Oct. 28, narrowing the bitcoin reserve shortfall backing L-$BTC to about 550 $BTC.

The transaction delivered exactly 50 $BTC and was confirmed in Bitcoin block 973548, according to Mempool. “Another 50 $BTC added. 550 $BTC to go,” JAN3 CEO Samson Mow wrote on X.

At 2:09 p.m. ET on Oct. 28, Mempool's Liquid explorer showed aggregate federation holdings of 3,703.43 $BTC against 4,253.43 L-$BTC in circulation. That represents about 87.07% reserve coverage, according to The Defiant's calculation, up from the 85.88% reported on Oct. 27.

Liquid is a Bitcoin sidechain whose L-$BTC token is intended to be backed one-for-one by bitcoin. The gap follows a Sept. 6 exploit that, according to Blockstream's incident assessment, created about 4,000 unbacked L-$BTC that was converted into bitcoin through peg-outs. Blockstream said 3,400 $BTC was returned on Sept. 7.

Swaps Are Open, Normal Peg-Outs Still Restricted

Mow also said “the federation has already been conducting semi-automated peg-outs for the last week to members.” The federation's own Oct. 20 announcement described restored user swap functionality through “semi-automated swaps for Federation members.”

For end users, participating providers offer a route back to bitcoin while normal direct withdrawals from federation reserves remain restricted. In an Oct. 27 update, the federation confirmed $BTC and L-$BTC swaps were available through AQUA, Bull Bitcoin and SideSwap.

The distinction affects how users receive bitcoin. SideSwap's Oct. 21 notice says payouts come from its own Bitcoin wallet at a one-for-one rate less a 0.1% fee. That wallet is replenished through partly manual bulk swaps, so requests can queue while refills arrive.

The federation's published recovery plan calls for restoring full one-for-one backing before controlled reactivation of direct federation peg-outs for authorized Peg-out Authorization Key holders. In its Oct. 27 update, the federation said normal peg-outs remained subject to enhanced operational controls while security hardening continued and an independent security audit neared completion.