actually, the hand was bitten off during a challenge between the fenris wolf and the aesir(gods of asgard). they wanted to trap the wolf(who is actually one of Loki's offspring), but said they would free him if he couldnt break free of the binding(a lie). they tried several times to chain him up, but the wolf kept breaking free of the chains, so Odin had the elves that created the weapons for him, create an unbreakable material. this "silken ribbon", was then proposed as the next challenge, and the wolf suspected a trick, so he agreed to be bound again, but as a condition one of the Gods had to place a hand in his mouth. and if he was not freed, he would bite off the hand. so Tyr was the only God who would do it, and i guess we know the rest.