L-BTC trading restarts as reserve covers about 85%

SideSwap reopened trading on the Liquid network on Sept. 10, resuming L-BTC markets while peg-in and peg-out functions remained suspended as the Liquid Federation carried out a security review.

SideSwap published a reserve snapshot from earlier on Sept. 10 showing 4,205 L-BTC outstanding and about 3,597 BTC held in the federation reserve, implying roughly 85.5% coverage and a gap near 608 BTC. An on-chain API read at 22:55 UTC the same day showed 4,229 L-BTC outstanding and about 3,601.47 BTC in the reserve, equivalent to about 85.15% coverage and a gap near 628 BTC. A Blockstream explorer recorded a block height of 4,051,868 at 22:55 UTC and showed that block production had resumed in a controlled mode.

SideSwap described its trading venue as a central-limit-order-book market where L-BTC is quoted and exchanged. With peg-outs paused, holders cannot redeem L-BTC for on-chain BTC until the federation restores peg operations. A peg-out on Liquid requires burning L-BTC and an authorized federation action tied to a registered Peg-out Authorization Key to release BTC on the Bitcoin network.

Public post-restart market data was limited at publication. There was no reproducible L-BTC/BTC order book snapshot, bid-ask spread, depth or slippage measure available, and no cross-venue price comparison was publicly verifiable. SideSwap said trades and markets on its platform were open, but stated that its statements covered only its service.

Blockstream posted a status update saying required functionary and bridge-node updates had been deployed and that Elements software received a security-focused update (version 23.3.4). Blockstream described reserve restoration as in progress and did not identify a source of capital or a timetable. SideSwap said it had been told by Blockstream CEO Adam Back that L-BTC would receive one-for-one coverage, but that SideSwap did not have details on how or when that coverage would be restored.

SideSwap also said any peg-ins and peg-outs initiated through its service that were in progress would be completed after blocks resumed, and that Bitcoin payouts completed before the pause were final. The company cautioned that its statements applied to its own service and that other providers might not offer the same assurances. Transfers of other issued assets on Liquid depend on their individual issuers’ backing and are separate from the L-BTC reserve.

Liquid’s protocol documentation defines one L-BTC as a claim backed by one BTC held by the federation. Restoring one-for-one redemption requires both reserve BTC and functioning bridge infrastructure, including a registered Peg-out Authorization Key and operating federation participants or peg-out partners. The federation must announce when peg-outs resume and any staged limits before holders can rely on direct exits to on-chain BTC.