Liquid Network has announced the complete restoration of its bitcoin reserves, achieving a 1:1 backing for all L-BTC tokens. This milestone comes nearly two months after a significant security breach that resulted in the theft of approximately 4,000 BTC from the network.
In an update, the Liquid Federation stated, "The Liquid Federation is pleased to announce that the network’s bitcoin reserves have been fully restored, reestablishing 1:1 BTC backing for all L-BTC." This follows the earlier restoration of BTC<>L-BTC swaps, which now enable users to seamlessly exchange between Bitcoin and Liquid at a 1:1 rate.
Following the attack, hackers returned about 3,400 BTC the day after the incident, while Blockstream, the developer of the Liquid Network technology, provided the remaining 600 BTC in several tranches. Samson Mow, co-founder of JAN3 and a Blockstream board member, confirmed the source of these funds.
“But where are the coins coming from??” Mow tweeted, clarifying that it was Blockstream.
The breach was attributed to a vulnerability in the Elements software, which allowed the creation of unsecured L-BTC. These tokens were subsequently used to withdraw bitcoins through the SideSwap wallet and trading platform, which is part of the Federation. However, Liquid has assured users that network operators were not hacked and private keys remained secure. A fix for the vulnerability has since been implemented, allowing the network to resume block production and transaction processing.
