# Alloyed BTC: Restore backing after the nBTC incident

**URL:** <https://forum.osmosis.zone/t/alloyed-btc-restore-backing-after-the-nbtc-incident/4122>\
**Category:** Proposal Discussion\
**Created:** [September 10, 2026, 11:21am UTC](https://forum.osmosis.zone/t/alloyed-btc-restore-backing-after-the-nbtc-incident/4122 "2026-09-10T11:21:23Z")\
**Posts on this page:** 1\
**Showing post:** 11

<div class="post-metadata">

**Author:** ![JohnnyWyles](https://sea2.discourse-cdn.com/flex020/user_avatar/forum.osmosis.zone/johnnywyles/32/3114_2.png) [@JohnnyWyles](https://forum.osmosis.zone/u/JohnnyWyles)\
**Post date:** [October 28, 2026, 9:52am UTC](https://forum.osmosis.zone/t/alloyed-btc-restore-backing-after-the-nbtc-incident/4122/11 "2026-10-28T09:52:50Z")

</div>

# Update: Alloyed BTC backing restored

The recovery approved in Proposal 1044 has been completed onchain, and Alloyed BTC is once again fully backed by real Bitcoin.

## What was done

1. Seizure of the frozen funds. The v32 upgrade (height 73,304,000, 27 October) moved the 22.65060846 BTC frozen by v31.1.0 from the exploiter’s address to the Osmosis Liquidity SubDAO, as authorised in step 3 of the proposal.
2. Reactivation with nBTC marked corrupted. On 28 October, the Alloy SubDAO, as moderator of the BTC transmuter (pool 1868), reactivated the pool and marked nBTC as a corrupted asset.
3. Withdrawal of the nBTC. In the same execution tranasction, the Liquidity SubDAO withdrew all 39.83974592 nBTC from the alloy. This used the 22.65 seized BTC together with 17.19 BTC from the community pool funds. The transmuter then removed nBTC from the alloy entirely.

Transaction: 3A7C8FC87A9554E418C44902024368954162877B4A2C6D50877B10FA64F5BA70

## Position now

| BTC | Before | After |
| --- | --- | --- |
| Shares outstanding | 110.570944 | 70.731198 |
| Real BTC collateral | 70.731198 | 70.731280 |
| nBTC counted as collateral | 39.839746 | 0 |
| Backing ratio | 63.97% | 100% |

BTC is now backed by WBTC, cbBTC, WBTC.eth.axl and WBTC.eth.atom. No BTC holder bears any part of the shortfall.

## Remaining steps

- Deposits and withdrawals of BTC on app.osmosis.zone will reopen shortly.
- The withdrawn nBTC is held by the Liquidity SubDAO and will be burned in a separate SubDAO proposal.
- Native WBTC currently makes up about 94% of the pool, above its 75% limit. Until the pool rebalances, swaps that add WBTC to BTC will be rejected. Redeeming BTC to WBTC and depositing other variants are unaffected. Native WBTC will be cycled out to other variants over the next week.
- About 0.80 nBTC held outside the alloy remains Nomic’s liability and is unaffected by this recovery.

Thank you to the validators who promptly adopted v31.1.0 and v32, and to the community for supporting the proposal.

---

_[View the full topic](https://forum.osmosis.zone/t/alloyed-btc-restore-backing-after-the-nbtc-incident/4122)._