The decentralized finance (DeFi) platform Sky, formerly known as MakerDAO, has approved a proposal to offload its exposure to wrapped Bitcoin (WBTC). This decision follows concerns raised by advisors regarding the potential risks associated with WBTC.
A governance vote conducted within the Sky community overwhelmingly supported the proposal to remove WBTC from the platform’s collateral. The proposal garnered 88.17% approval, with 95,826 MKR tokens pledged in support.
Sky will implement a multi-phase process to offload WBTC from its system. The first phase is scheduled to begin on October 3rd, with the final phase concluding on November 28th.
BA Labs, an advisor to Sky, raised concerns about the recent changes in WBTC ownership and control. The team expressed concerns about the potential counterparty risks associated with entities affiliated with Justin Sun, the founder of Tron.
Sky is exploring alternative wrapped Bitcoin options, such as Coinbase’s cbBTC and Threshold’s tBTC. These alternatives may offer greater transparency and security compared to WBTC.
Another DeFi platform, Aave, has also expressed concerns regarding WBTC. The Aave community is considering a proposal to reduce the platform’s exposure to WBTC. Similar to Sky, Aave’s concerns are related to the potential risks associated with WBTC’s ownership and control.
The concerns surrounding WBTC have had an impact on the market. The market capitalization of wrapped Bitcoin on Ethereum has declined by almost 40% since its peak in November 2021.
The decision by Sky to offload its WBTC collateral reflects the growing concerns within the DeFi community about the potential risks associated with this particular wrapped Bitcoin variant. As the industry continues to evolve, it is likely that other DeFi platforms will also reassess their exposure to WBTC and explore alternative options.
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Author: Sb
