SideSwap reopens Bitcoin swaps while Liquid reserves stay locked

SideSwap, a swap provider on the Liquid Network, has reopened conversions from the synthetic Bitcoin token L-BTC into Bitcoin.

Direct withdrawals from the Liquid Federation, which manages the network’s Bitcoin reserves, remain restricted. SideSwap’s payouts can still queue during refills of its own Bitcoin wallet.

In its Oct. 21 update, SideSwap said users had made about 600 peg-outs, and it had paid more than 60 BTC since reopening on Oct. 20.

In Liquid’s Sept. 23 assessment, Blockstream said an Elements verification-cache flaw created approximately 4,000 unbacked L-BTC and led to Bitcoin leaving Liquid’s reserve through SideSwap.

What holders receive, and why they may wait

Under SideSwap’s reopening terms, holders send L-BTC and receive Bitcoin at a quoted 1:1 conversion rate less the provider’s standard 0.1% fee. The service is available through its app or website, and a wallet using SideSwap’s service may add its own fee.

For now, SideSwap says it pays users from its own Bitcoin wallet and swaps the L-BTC it receives for Bitcoin in bulk.

That separates the customer’s conversion from replenishment of the provider’s inventory. The customer supplies L-BTC, but the Bitcoin for payment must be available in SideSwap’s wallet while the Federation’s own withdrawal route remains restricted.

Those bulk refills are still partly manual. If a refill is pending, peg-outs wait and are paid in arrival order once the Bitcoin reaches the wallet.

SideSwap says a waiting peg-out is not lost and requires no action from the user. Its Oct. 21 update gives no maximum wait, leaving holders with a reopened conversion route but no stated deadline for a queued payment.

The quoted conversion is separate from L-BTC’s USDT price on SideSwap’s order books, which buyers and sellers set. The service rate also does not establish that Liquid’s full reserve backing has been restored.

The Federation’s Oct. 20 recovery update describes semi-automated swaps through participating providers without protocol-imposed volume limits.

Direct Federation withdrawals await a separate restart. The Federation says its final restoration phase requires reestablishing full 1:1 Bitcoin backing, followed by controlled reactivation of peg-outs for authorized peg-out key holders.

Resumption still depends on completing security and operational requirements, and the Federation’s Oct. 20 statement and SideSwap’s Oct. 21 update give no date for that final stage.