Osmosis has opened governance forum discussions on a proposal to restore full reserve backing for Alloyed BTC. The plan would confiscate 22.65 BTC previously frozen in attacker addresses through an emergency on-chain upgrade and use BTC reserves from the Osmosis community pool to cover the remaining shortfall of about 17.19 BTC. The deficit emerged after Nomic minted 40.65 nBTC on Osmosis without Bitcoin backing, a situation that remained hidden for 74 days before Nomic paused operations on September 7. The incident created a total shortfall of 39.84 BTC; about 22.65 BTC was frozen under emergency upgrade v31.1.0, while roughly 18 BTC was laundered through Tornado Cash and cannot be directly recovered.