Osmosis Restores Full Support for allBTC, Utilizing Seized Assets and Community Funds

Osmosis has restored the reserve support for Alloyed BTC asset allBTC through a governance proposal. Previously, the Nomic cross-chain bridge minted 40.650602 nBTC on June 25, causing the support rate for allBTC to drop to 63.97%. After Nomic suspended operations on September 7, Osmosis validators froze 22.650608 allBTC held by the attacker through an emergency upgrade. According to the proposal, Osmosis will transfer the frozen attacker assets to the liquidity sub-DAO, utilize 12.4838 allBTC held in the community pool, and release approximately 4.7 BTC that was originally allocated for USDC liquidity deployment to fill a gap of about 39.84 BTC. The subsequent v32 software upgrade will mark the contaminated nBTC as invalid, withdraw it from the allBTC alloy, and destroy it, restoring full support for allBTC holders. The proposal indicates that approximately 18 BTC have been transferred out of Osmosis and laundered through Tornado Cash, making direct recovery impossible. Osmosis stated it will continue to track the remaining funds and will restore the deposit and withdrawal functionality of allBTC after the allBTC balance reaches zero and nBTC is removed from the alloy.

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