Osmosis' allBTC Token Under-Backed by 36% Due to Bridge Flaw

Osmosis' allBTC token has been under-backed by approximately 36% since September 9, 2026, due to a flaw in Nomic's Bitcoin bridge. This means that holders of allBTC actually own less Bitcoin than the token supply suggests, as the pooled token combines five bridge versions including the faulty nBTC.

The issue was caused by double-spending of Bitcoin deposits through the bridge, allowing investors to receive more tokens than they were entitled to. Osmosis has frozen minting and withdrawals to contain the issue and plans a community vote to seize frozen Bitcoin to cover part of the shortfall.

Investors should be aware that pooled tokens carry shared risk from all underlying bridges, unlike holding individual bridge tokens or Bitcoin directly. The outcome of the vote will affect when full backing is restored and how losses are managed.