Sky, the decentralized finance platform formerly known as MakerDAO, is on track to hold an executive vote on September 26, 2024 to remove wrapped Bitcoin (wBTC) as collateral in its ecosystem. This decision is based on a proposal initially submitted by BA Labs, a DeFi risk management firm with influence in Sky’s governance.
BA Labs’ proposal argues the need to completely de-collateralize wBTC due to concerns over Tron founder Justin Sun’s involvement with the custodian of the underlying assets.
According to BA Labs, “we see a long history of concealing ownership, moving funds without clear authority, lack of transparency, and actions that could negatively impact end users or lead to impairment of assets or custody services.”
The wBTC unpegging process will take place in several steps across multiple executive votes, beginning with the vote on September 26. BA Labs concludes that “the only reliable way to mitigate wBTC risk is to pursue a full collateral unpegging.”
Sky currently has about $200 million in wBTC-secured loans, spread across the SparkLend platform at $73 million and Sky’s legacy vaults at $127 million.These figures underline the magnitude of the potential impact of disengagement.
A wrapped bitcoin, or wrapped Bitcoin (wBTC), is a representation of BTC on the Ethereum Blockchain or any other blockchain other than the original. This token, which follows the ERC-20 standard, allows BTC to be used in the Ethereum ecosystem, where it can interact with decentralized applications (dApps), smart contracts and services of decentralized finance (DeFi).
The debate over wBTC intensified after the advertisement BitGo’s decision to transfer control of the asset to a joint venture with BiT Global, a custody platform with regulated operations in Hong Kong, associated with Justin Sun and the Tron ecosystem. This move, presented as a decentralization of custody, has been met with skepticism by BA Labs and others in the Sky community.
BA Labs’ proposal also mentions that legacy wBTC vaults are not considered an integral part of the native vault engine on Sky Atlas, making it easier to decouple under the scope language.
Sky’s decision could strengthen competitors like dlcBTC, tBTC, and FBTC, along with the recent launch of Coinbase from its own wrapped bitcoin competitor, cbBTC. This move reflects increasing diversification and competition in the wrapped token space, driven by controversies and security concerns.
This article was created using artificial intelligence and edited by a human on the editorial staff.
Crypto Keynote USA
For the Latest Crypto News, Follow ©KeynoteUSA on Twitter Or Google News.