BiT World and Justin Solar’ will quickly train management over Wrapped Bitcoin by way of a three way partnership with BitGo.
MakerDAO is discussing whether or not to stop customers from minting its DAI stablecoin in opposition to Wrapped Bitcoin (WBTC) after BitGo, the group behind Wrapped Bitcoin, introduced plans to switch management over WBTC to a three way partnership comprising itself, BiT World, and Justin Solar’s Tron ecosystem.
On Aug. 10, BA Labs, a web3 danger and analytics group, printed a proposal on MakerDAO’s governance discussion board calling for the challenge to cut back its WBTC vault debt ceilings to 0 DAI and disable WBTC borrowing on the SparkLend cash market protocol.
BA Labs emphasised that whereas the measures would forestall new borrowing in opposition to WBTC, they might not have a direct influence on present customers with excellent loans or DAI mints collateralized by WBTC.
“BitGo announced it is planning to transfer control of the WBTC product to a joint venture with BiT Global,” BA Labs mentioned. “BitGo has disclosed that this change implements a partnership with Justin Sun and the Tron ecosystem; as such we can infer that Justin Sun will have significant influence or control over the joint venture managing WBTC.”
Nearly all of BA Labs’ issues relate to the involvement of Justin Solar, the founding father of Tron, within the new three way partnership. BA Labs claims that TrueUSD, a stablecoin bought to a Solar-linked conglomerate final yr, suffered a “deterioration in operational processes and transparency” since the sale, including suspending real-time proof of reserves, price depegs, disrupted redemption services, and the resignation of its previous management team.
“We find that Sun’s involvement as a controlling interest in the new WBTC joint venture presents an unacceptable level of risk,” BA Labs said.
BA Labs added that Maker and Spark should consider fully offboarding WBTC if BitGo and related parties cannot “convincingly demonstrate that maintaining current collateral integrations are safe.”
Roughly 10% of DAI’s 5.2 billion token supply is backed by Wrapped Bitcoin, with Maker’s vaults currently holding $500 million worth of WBTC, according to Daistats. Users have also deposited $289.3 million worth of WBTC to SparkLend, making up 7% of the protocol’s $4.1 billion in total value locked.
BitGo announced its restructuring plans on Aug. 9, with the transition scheduled to take place after 60 days.
DAI is the third-largest stablecoin behind Tether and USD Coin.
Divided community
MakerDAO’s community is divided on the proposal, with some forum-goers expressing support for BA Labs’ recommendations — notably including Maker’s ecosystem team — while others articulated reservations.
GFX Labs, an analytics provider to MakerDAO, described the proposal as “extreme,” asserting that the measures would be inconsistent with how Maker treats other supported centralized assets, such as Ethena’s USDe stablecoin.
“This seems like a huge overreaction,” added Sparkuser, a Maker community member.
Rival tokenized Bitcoin issuers were eager to pitch their products as a potential replacement for WBTC, including ckBTC, tBTC, and dlcBTC.
Mike Belshe, the CEO of BitGo, characterized the proposal as a knee-jerk reaction to Sun’s involvement. “I’d encourage you to meet with the BiT Global team to hear how the custody will be secured along with BitGo,” Belshe said.
Belshe also stressed that BitGo will continue to co-sign transactions. “The underlying security is the same as what you have today,” he continued.
Monet-supply of BA Labs replied that BitGo’s announcement failed to communicate key information. They asked Belshe to share BiT Global’s company details, directors and offices, ownership structure, and the reasoning underpinning the restructure and Sun’s involvement.
Belshe said answering these questions would require the divulgence of “confidential information.” Belshe inspired MakerDAO to nominate an lawyer and conduct due diligence underneath a proper non-disclosure settlement with Bit World.
Justin Solar additionally took to social media to handle the issues about his involvement with WBTC.
“My personal involvement in WBTC is entirely strategic,” Solar tweeted. “I do not control the private keys to the WBTC reserves and cannot move any BTC reserves… There have been no changes to WBTC.”
The worth of Maker’s MKR token is down 3.7% prior to now 24 hours, in response to CoinGecko.
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