Now in existence for almost 5 years, WBTC managed by the American company BitGo is about to transfer its management to a joint venture with BiT Global. This change, which involves a partnership with Justin Sun, is sparking debate and reactions in the crypto community.
Is WBTC about to disappear?
Recently, the company BitGo, which is behind Wrapped Bitcoin, known under the ticker WBTC, announced on the social network X the transfer of its WBTC activity ” Towards the world's first multi-jurisdictional and multi-institutional custody through partnership and joint venture with BiT Global “.
In other words, this will result in custody being split between multiple jurisdictions, including Hong Kong and Singapore, unlike the current custody system based exclusively in the United States.
BitGo is pleased to announce the move of its WBTC business to the world's first multi-jurisdictional and multi-institutional custody via a unique partnership and joint venture with BiT Global.
This upgrade will occur 60 days from today with no disruption or interruptions to… pic.twitter.com/yNUoyTwsqL
— BitGo (@BitGo) August 9, 2024
This radical change, which must be made 60 days after this declaration, i.e. on October 8, has provoked strong reactions of mistrust within the crypto community.
💡Learn more – What is Wrapped Bitcoin (WBTC)?
Indeed, this development would involve a partnership with the Tron ecosystem and its highly controversial founder, Justin Sun.
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Community Reactions to Justin Sun's Involvement in Wrapped Bitcoin
There have been many reactions to BitGo’s announcement. A proposal on the forum of MakerDAO, the decentralized finance (DeFi) protocol that recently changed its name to Sky, states that “ Sun's involvement as a majority stake in the new WBTC joint venture presents an unacceptable level of risk “.
This conclusion is justified, in this same proposition, by a lack of ” transparency » and « Possible diversions » from several projects affiliated with Justin Sun.
In order to mitigate a possible risk, the proposal mentions a total halt to new WBTC borrowings as long as BitGo cannot ” convincingly demonstrate that maintaining current collateral integrations is safe ” This proposal has since been ratified by the protocol governance.
BitGo CEO Mike Belshe personally responded on the same forum that this initiative is “ more of a reaction to Justin Sun's name than to facts ” before adding that Justin Sun ” will not actually have the ability to move funds arbitrarily. »
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Threshold's proposal for a merger with wBTC
Following BitGo's announcement and the diminishing confidence in the future management of WBTC, many pretenders to the throne have proposed their own alternatives.
One stands out from the crowd by offering an unusual action: a potential merger between WBTC and tBTC, managed by the decentralized organization Threshold.
The much-debated proposal would give BitGo the opportunity to receive a subsidy in T tokens, making BitGo the largest holder of Threshold tokens.
In exchange for this subsidy, BitGo should gradually transfer its privileges, and then its WBTC will migrate to Threshold's decentralized custody gradually, with deposits spread across multiple wallets. Recall that WBTC's TVL is currently close to $9 billion.
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Current tBTC would then be exchangeable for WBTC, but under the decentralized and permissionless custody of Threshold.
This measure, although still only at the discussion stage, arouses divergent interests in the Threshold community. Indeed, To carry out this action, the decentralized organization (DAO) would add 15% of T tokens to the current supply, mechanically leading to a dilution of the token.
Additionally, it would make BitGo the primary entity holding the T token, giving it the keys to protocol governance.
However, such a merger operation could lead to a higher TVL and would certainly increase the price of the T token, notably via protocol fees.
Although this proposal could be an interesting alternative for the WBTC, it remains unlikely to date.
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Sources: MakerDAO Forum (Sky), Threshold Forum
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Passionate about the blockchain ecosystem, I like to deepen my knowledge and share my discoveries. In a perpetual quest to learn more about cryptos, I recently joined the Cryptoast Research team where I provide a weekly fundamental analysis.
Theo Zananiri
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