Sky, the decentralized finance lender formerly known as MakerDAO, is reconsidering its plan to offboard wrapped bitcoin (WBTC) as collateral, following a recent recommendation from an influential advisor. This development arises after extensive discussions on the Sky discussion forum involving Mike Belshe, CEO of BitGo, which was the sole custodian of the bitcoin backing WBTC until an August agreement transferred custody to a strategic partnership with Tron founder Justin Sun.
WBTC is a token that enables investors to use bitcoin (BTC) on various blockchains, such as Ethereum, and plays a central role in the DeFi lending space as collateral. With a market capitalization of $9.7 billion, WBTC remains a significant asset within the crypto ecosystem.
Concerns were raised by Sky advisor BA Labs regarding Sun’s involvement in the project, especially since approximately $200 million in loans on the platform were connected to WBTC collateral. Despite the Sky community’s overwhelming vote last week to proceed with the advisor’s recommendation to offboard WBTC, a detailed discussion persisted. Belshe highlighted in recent forum posts that the new custody arrangement had been misunderstood, clarifying that Sun would not have unilateral control over key management practices.
“They will not ‘have the ability to direct changes to key management practices’ at BitGo or BitGo Singapore,” Belshe stated on September 20.
Following these clarifications, BA Labs issued a statement indicating increased comfort with the current state of WBTC operations and key management. The advisor noted that collateral exposure to WBTC had decreased to around $170 million, bringing the associated risk to a more manageable level.
“While we continue to have concerns about BitGlobal serving as a signer for WBTC, we find it is no longer at a level requiring immediate collateral offboarding,” BA Labs remarked. “Therefore, we recommend indefinitely pausing the collateral offboarding procedures.”
Alternatives to Wrapped Bitcoin
In response to concerns regarding his involvement, Sun asserted to CoinDesk that WBTC maintains a “sterling track record that is unmatched by any competing offers recently floated by the skeptics.”
The ongoing drama surrounding wrapped bitcoin has spurred competitors to offer alternative versions of the token, such as dlcBTC, Threshold’s tBTC, and FBTC, which is supported by the Mantle Network. Additionally, on September 12, Coinbase, the largest U.S. crypto exchange, launched its own wrapped bitcoin competitor, cbBTC.
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