Liquid Network releases post-incident report as outage continues
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Liquid Network’s incident report attributes the exploit to a range-proof verification caching flaw in Elements, with the sidechain still offline pending an emergency release. While no federation keys were compromised, the outage and invalid pegout rejection highlight operational and software-risk in Bitcoin-adjacent infrastructure. Near-term market impact is likely concentrated in Liquid-based flows (L-BTC peg-ins/peg-outs) and broader sentiment toward sidechain security.
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Liquid Network has published an incident report on Sunday's exploit, with the network still offline. The report says the issue stemmed from a bug in the way Liquid nodes cached range-proof verification results in the open-source Elements software, and adds that no federation keys were compromised. Blockstream plans to ship an emergency Elements update in about 48 hours. After the release, functionaries are expected to restore the network with the corrected state, including rejecting the invalid pegout.
