TLDR:
- In a rebranding from MakerDAO, Sky has decided to discard wrapped Bitcoin (WBTC) as collateral.
- The vote passed with 88% approval
- The unease arose due to BitGo's connection with Justin Sun-associated BitGlobal, affecting the wrapped Bitcoin custodianship.
- Starting from October 3 to November 28, Sky will gradually reduce its holdings of WBTC.
- Other platforms in the DeFi sector, like Aave, are also evaluating their investments and risk tied to WBTC.
Previously known as MakerDAO, the decentralized finance lending platform Sky has chosen to reject wrapped Bitcoin. The decision unfolded after a governance vote spanning three days, wrapping up on September 19, 2024, garnering a strong 88.17% agreement from the Sky members. as collateral from its platform.
The voting process sprang into action after BA Labs, serving as a consultant for Sky, pointed out issues with recent shifts in control over WBTC.
Alarms were sounded in August 2024 when BitGo, the initial custodian of WBTC, opted to team up with BiT Global, linked to Tron’s founder Justin Sun, to manage the asset.
Within Sky's decentralized strategy, SparkLend contains approximately $61.38 million in collateralized loans backed by WBTC. Their intention is to offload this in phases from early October to late November 2024.
Eliminating WBTC as collateral is a notable move, considering Sky's substantial $200 million in loans secured by the token. WBTC is a significant digital currency, with a substantial $10 billion circulating, and it empowers Bitcoin use across alternate blockchains like Ethereum.
In response to apprehensions, Justin Sun defended WBTC by emphasizing that assets such as WBTC, USDT, and Tron are independent of any Chinese regulations. He highlighted WBTC’s exceptional track record, rising above any alternate solutions skeptics have recently introduced.
Despite Sun’s reassurances, Sky chose to proceed with eliminating WBTC, focusing now on considering other wrapped Bitcoin solutions for collateralization, including cbBTC by Coinbase and tBTC by Threshold.
Sky isn't the only entity reassessing their stance on WBTC risk. A proposal emerged on the Aave governance forum as of September 18 to potentially cut back on WBTC, driven by similar concerns about BitGo's affiliation with BiT Global. Aave, the largest in DeFi lending, faces nearly $990 million in WBTC obligations.
However, Stani Kulechov, the founder of Aave, pointed out that the current discourse is merely a suggestion by a risk advisor to limit WBTC and isn't an immediate move to de-list it.
Claims suggesting Aave plans to eliminate wBTC are misleading; a risk provider merely proposed capping wBTC. Reviewing Aave DAO practices is advisable.
The current figures show around 152,942 WBTC circulating on Ethereum, featuring a market valuation of nearly $9.6 billion, reflecting close to a 40% drop from its past high of $15.8 billion observed in November 2021.
— Stani (@StaniKulechov) September 19, 2024
Introducing a stepwise plan to withdraw WBTC from October 3 to November 28 aims for a seamless transition, potentially reducing market tumult.
At the helm of Blockonomi and the founder of the UK-based Kooc Media, stands an advocate for Open-Source, Blockchain, and a universally accessible and unbiased internet.
