bOSMO bug prompts holder compensation plan as liquidity dries up

A bug in Backbone Labs’ bOSMO liquid-staking contract on Osmosis has been overpaying redemptions since April 2026. Users could withdraw approximately 50% more OSMO than they were actually entitled to. Now the Osmosis team has a compensation plan for remaining holders, with one firm catch. Anyone who bought bOSMO after a specific block snapshot will not be compensated. What broke, and how badly The contract double-counted the OSMO staked to Backbone’s validator, so it believed it held more than it did. That accounting error inflated the redemption rate to roughly 1.676 OSMO per bOSMO. The correct figure was closer to 1.117 OSMO per token. The issue came to a head on 10 October 2026. The community pool, which held about 97% of all bOSMO in existence, executed a single redemption of 776,000 bOSMO. That transaction extracted approximately 1.3 million OSMO, draining nearly all of the backing left in the contract. The snapshot and the compensation plan Eligible holders will be compensated based on a snapshot taken at block 72,237,940. That block was timestamped at around 02:59 BST on 10 October 2026, the same day as the big redemption. The Osmosis team plans to begin distributing compens...