Liquid Network Fully Restores Bitcoin Backing After Exploit
Liquid Network, a Bitcoin sidechain operated by Blockstream, has restored full backing of its bitcoin reserves following a $320 million exploit that occurred in September, The Block reported.
Blockstream provided the funds needed to bring the network’s reserves back to full backing, according to the report. The Liquid Network allows users to move bitcoin onto a sidechain for faster and more private transactions, with tokens on the network intended to be fully backed by bitcoin held in reserve.
The September exploit had left a shortfall in those reserves, raising questions about the network’s solvency and the integrity of its peg to bitcoin. The restoration of full backing addresses that gap, though the report did not provide further detail on the mechanics of the original exploit or how the shortfall was identified.
Sidechains and layer-2 networks built on top of Bitcoin have become an increasingly important part of the broader ecosystem, offering functionality such as confidential transactions and faster settlement that are not natively available on the Bitcoin base layer. Incidents affecting the reserves backing these systems can raise concerns among users and institutions about counterparty and custody risk.
The Block’s report did not include additional comment from Blockstream or details on whether any user funds were affected during the period in which reserves were not fully backed.
Based on reporting by www.theblock.co.
