SideSwap Reports About 600 Redemptions After Reopening L-BTC Swaps

SideSwap said on Oct. 21 that its users had made about 600 L-$BTC-to-bitcoin redemptions since its service reopened the previous day, paying out more than 60 $BTC while direct Liquid federation peg-outs remain restricted.

The Liquid-based exchange and wallet said payouts come from its own bitcoin wallet at a one-for-one rate, less its standard 0.1% fee. The service gives holders a route out of L-$BTC, Liquid’s bitcoin token, without waiting for normal withdrawals from federation reserves to resume.

The reserve gap has not narrowed. At about 5:04 a.m. ET on Oct. 21, Mempool’s Liquid explorer showed 3,632.23 $BTC in federation holdings against 4,234.76 L-$BTC in circulation, or about 85.8% coverage. The 602.53 $BTC shortfall was unchanged from The Defiant’s Oct. 20 report.

“Pegs are back both ways,” SideSwap wrote in its Oct. 21 post. Its detailed notice says users can convert between bitcoin and L-$BTC through its app or website, but may face delays: SideSwap refills its payout wallet through bulk swaps that remain partly manual. Requests wait in a queue and are paid in arrival order once a refill lands.

Full Backing Before Federation Withdrawals

The provider-operated route is the first stage of Liquid’s recovery plan, which enables semi-automated swaps through participating providers without protocol-imposed volume limits. Direct federation peg-outs remain restricted.

Liquid is a Bitcoin sidechain designed to back L-$BTC one-for-one with bitcoin. The shortfall follows the Sept. 6 security incident: Blockstream’s assessment says an Elements software exploit created approximately 4,000 unbacked L-$BTC that was converted into bitcoin, and that 3,400 $BTC was returned on Sept. 7.

SideSwap said the roughly 600 $BTC funding gap will be filled once the security review and updates are complete. The federation’s plan calls for restoring full one-for-one backing before reactivating direct peg-outs for authorized Peg-out Authorization Key holders. It gives no firm date for that final stage.