# Liquid Network Advances Recovery With Phased BTC-LBTC Swap Return

By Simon Yoon

Canonical URL: https://www.tokenpost.com/news/technology/36034
Published: 2026-10-20T22:20:28.000Z
Updated: 2026-10-20T22:20:28.000Z
Section: Technology

> Federation nodes managing Bitcoin reserves have completed a software upgrade, while direct peg-outs remain restricted as reserves are rebuilt.

Liquid Network has completed a software upgrade for the federation nodes that manage its Bitcoin reserves and is coordinating with participating swap providers to resume Bitcoin (BTC) and LBTC conversions, marking a key step in recovery from a September exploit.

The planned service will be semi-automated and carry no protocol-level volume cap. It is intended to let most users exchange LBTC back into Bitcoin through participating providers.

Direct peg-outs through the federation remain restricted. The final recovery phase is to rebuild the network’s Bitcoin reserves to a 1:1 ratio. After that, normal federation peg-outs are planned to resume for holders of authorized PAK keys. Liquid also plans to make reserve balances visible through a block explorer, allowing users to check the backing.

The completed upgrade clears a key recovery milestone, but direct peg-outs remain restricted while reserves are rebuilt. The next steps are the phased reopening of provider-based swaps, followed by restoring normal peg-outs for authorized key holders.