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An influential adviser to Sky, the decentralized finance lender formerly known as MakerDAO, has reassured stakeholders regarding Tron founder Justin Sun’s role in the custody of Bitcoin backing the Wrapped Bitcoin (WBTC) token. This development may lead Sky to reconsider its plan to offboard WBTC as collateral.
The discussions took place on Sky’s forum, particularly involving Mike Belshe, CEO of BitGo, which was the sole custodian for WBTC until a recent partnership with Sun. WBTC allows Bitcoin holders to utilize their assets on other blockchains, such as Ethereum, and plays a central role in the DeFi lending ecosystem, boasting a market capitalization of $9.7 billion.
BA Labs, a key adviser to Sky, had previously raised concerns about Sun’s involvement, especially since approximately $200 million in loans on the platform were tied to WBTC collateral. Recently, Sky’s community voted to proceed with a five-step offboarding process for WBTC, but discussions persisted post-vote.
Belshe clarified in the forum that Sun would not have unilateral control over key management practices at BitGo or BitGo Singapore, which are responsible for managing the custody of WBTC. Following these discussions, BA Labs announced that they were now more comfortable with WBTC’s operations and key management, noting a reduction in collateral exposure to around $170 million, which they deemed a more acceptable risk.
While concerns remain about BitGlobal serving as a signer for WBTC, BA Labs recommended pausing the collateral offboarding process indefinitely. In response to the scrutiny, Sun defended WBTC’s track record, asserting it surpasses that of competing alternatives that have recently emerged.
This scrutiny has sparked interest in alternative wrapped Bitcoin tokens, including dlcBTC, Threshold’s tBTC, and FBTC, supported by Mantle Network. Additionally, Coinbase recently launched its own competitor, cbBTC, further intensifying the competition in this space.
