Liquid Network's L-BTC Backing Ratio Plummets to 4.70%
The Liquid Network, a sidechain of Bitcoin, has been at the center of controversy after it was discovered that the L-BTC token's backing ratio had fallen to a mere 4.70%. This means that if all holders were to redeem their tokens today, the balance would stretch to just under five in a hundred.
According to publicly available data, the Liquid Federation holds 197.47190204 BTC in reserve against 4,205.01883617 L-BTC issued on the network. This shortfall amounts to approximately $319 million (274 million euros) at the CoinGecko price recorded on September 7.
The incident has raised questions about the security and stability of the Liquid Network, which was built for fast settlement between exchanges and trading houses. The federation operates the network with a group of member companies that signs the blocks and jointly controls the Bitcoin in custody.