Decentralized finance (DeFi) protocol Sky, formerly MakerDAO, is reportedly considering an exit from Wrapped Bitcoin. At the center of the potential move is the transfer of BitCo’s WBTC business to a joint venture run with BiT Global, a company close to Justin Sun.
Sky Unveils Plan of Attack to Ditch Wrapped Bitcoin (BTC)
Sky, formerly MakerDAO, plans to remove Wrapped Bitcoin (WBTC) as a collateral token within its ecosystem. It is on the protocol forum that this Thursday, the team in charge of managing the protocol behind the stablecoin DAI brought up the idea.
In its message, the Sky team explains that this withdrawal would take place in several stages. The protocol developers would be asked to vote on whether or not to abandon WBTC.
👨🏫 To learn more – What is Wrapped Bitcoin (WBTC)?
Since this message was published, Sky users have been asked to close their WBTC Legagy vaults and close their token-linked loan positions on the SparkLend platform to avoid any liquidation.
At present, WBTC guarantee backs no less than $200 million of collateralized debt obligation (CDO) on Sky. This WBTC-backed debt is split as follows: $73 million on SparkLend and $127 million in MakerDAO's legacy vaults.
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The alleged partnership between BitGo and Justin Sun pointed out by the protocol
In order to justify its proposal to withdraw from WBTC, the team behind Sky mentioned ” recent changes in ownership and control of WBTC, possibly involving Justin Sun or affiliated companies ».
In recent days, BitGo, one of the entities that originated WBTC and manages the token, recently announced its intention to partner with BiT Globala company linked to Bithumb and the controversial Justin Sun, the founder of Tron. This partnership should allow the creation of a joint venture that would oversee the WBTC from October 8.
If this change were to take place, WBTC custody would be decentralized and distributed across multiple jurisdictionsincluding Hong Kong and Singapore, unlike the current custody system based exclusively in the United States. The announcement sparked great distrust among a large part of the crypto communityconvinced that the WBTC is about to disappear.
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For the Sky team, this collaboration between BitGo and the founder of Tron ” poses significant counterparty risks based on past history with other Justin Sun affiliated products ” Sky's risk analyst provided some clarification, proving that the team behind the protocol was not convinced by Justin Sun's past :
It is very likely
that Justin Sun or affiliated companies control BiT Global, ownership being concealed by shell companies and appointed directors […] Given the evidence of cover-ups and concerns about the validity of prior disclosures surrounding Sun-affiliated entities and products, we believe that legal due diligence would not provide an adequate level of assurance.
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Source : MakerDAO Forum
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Surprised by the rise of crypto-assets in the late 2010s, I started to closely follow this sector that fascinates me to the highest degree. When I am not in football stadiums, rugby or handball halls, I work on writing relevant articles about cryptocurrencies and more broadly, Web3.
Zacharie Tazrout
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