A peg-in locks bitcoin on the main chain and issues an equivalent token on the sidechain; a peg-out is the reverse. On Liquid, peg-outs are signed by a federation of functionaries, so the holder's keys control the L-BTC but not the release of the underlying bitcoin.
In September 2026 a 4,000 BTC peg-out was followed by a pause of the network; 3,400 BTC were later returned to the federation's address while the actors kept 598.5 BTC. The Gazette's Story on the episode is where this term was first used.
The lesson generalises: the exit is a separate asset from the balance.