SideSwap reopens L-BTC to Bitcoin swaps as Liquid Federation peg-outs stay restricted
In brief
- SideSwap reopened L-BTC to Bitcoin conversions on Oct. 20 at a quoted 1:1 rate, minus 0.1%.
- SideSwap pays out from its own Bitcoin wallet; partly manual refills can queue payments.
- About 600 peg-outs were made and more than 60 BTC paid by Oct. 21, SideSwap said.
- Liquid Federation direct withdrawals remain restricted, with no date given for the final stage.
How the reopened swaps work
Under SideSwap's terms, holders send L-BTC and receive Bitcoin at a quoted 1:1 conversion rate minus the provider's standard 0.1% fee. It's available through SideSwap's app or website (wallets that use the service can add their own fee on top).
Payouts come from SideSwap's own wallet. The company said it pays users from its Bitcoin wallet, then swaps the L-BTC it receives for Bitcoin in bulk.
So what happens when that wallet needs topping up? The bulk refills are still partly manual, and when one is pending, peg-outs wait and get paid in arrival order once the Bitcoin reaches the wallet. SideSwap said a waiting peg-out isn't lost and doesn't require any action from the user, though its Oct. 21 update gave no maximum wait time.
By that update, users had made about 600 peg-outs and SideSwap had paid more than 60 BTC since the reopening.
What the rate doesn't tell you
The quoted conversion rate is separate from L-BTC's USDT price on SideSwap's order books (buyers and sellers set that one). CryptoSlate also noted that the service rate doesn't establish that Liquid's full reserve backing has been restored.
That's the caveat that matters most here.
The backstory comes from Blockstream. In a Sept. 23 assessment for Liquid, Blockstream said an Elements verification-cache flaw created approximately 4,000 unbacked L-BTC and led to Bitcoin leaving Liquid's reserve through SideSwap. Those figures are Blockstream's own.
The Federation's path back
The Liquid Federation's Oct. 20 recovery update described semi-automated swaps through participating providers, without protocol-imposed volume limits. Its final restoration phase requires reestablishing full 1:1 Bitcoin backing, followed by a controlled reactivation of peg-outs for authorized peg-out key holders.
Resumption still depends on completing security and operational requirements. Neither the Federation's Oct. 20 statement nor SideSwap's Oct. 21 update put a date on that last stage, so for now L-BTC holders are working through providers like SideSwap rather than the Federation itself.
Frequently asked questions
How does SideSwap's reopened L-BTC to Bitcoin swap work?
Holders send L-BTC to SideSwap and receive Bitcoin at a quoted 1:1 conversion rate minus the provider's standard 0.1% fee. The service is available through SideSwap's app or website, and wallets using SideSwap's service can add their own fee.
Why can SideSwap peg-out payments be delayed?
SideSwap pays users from its own Bitcoin wallet and swaps the L-BTC it receives for Bitcoin in bulk. Those refills are partly manual, so when one is pending, peg-outs wait and are paid in arrival order. SideSwap said a waiting peg-out is not lost, but its Oct. 21 update gave no maximum wait time.
When will direct Liquid Federation withdrawals resume?
No date has been given. The Liquid Federation's Oct. 20 recovery update said the final phase requires reestablishing full 1:1 Bitcoin backing, followed by controlled reactivation of peg-outs for authorized key holders, subject to security and operational requirements.
