MakerDAO Reconsiders WBTC Use After Key Meeting

Sky, previously known as MakerDAO, is reconsidering its stance on using Wrapped Bitcoin (WBTC) as collateral after a crucial meeting with BitGo CEO Mike Belshe.

This shift in perspective comes amid ongoing custody concerns regarding the Bitcoin backing WBTC, as well as recommendations from Sky’s advisor, BA Labs.

WBTC enables Bitcoin to function on blockchains like Ethereum and has a market cap of $9.7 billion. Concerns arose when BitGo transitioned its custodial role to a partnership involving Tron founder Justin Sun, which alarmed BA Labs due to the $200 million in loans on Sky’s platform tied to WBTC. Following this, the Sky community voted to phase out WBTC starting in October.

However, discussions continued, leading Belshe to clarify on Sky’s forum that Sun would not have exclusive control over custody. He emphasized that BitGo and BitGo Singapore would maintain independence in managing multi-signature keys.

Following this clarification, BA Labs expressed greater comfort with WBTC’s operational integrity and noted that exposure to WBTC collateral had dropped to about $170 million, reducing associated risks. Consequently, they suggested pausing the removal process.

This decision to retain WBTC as collateral coincides with heightened competition in the Wrapped Bitcoin market, where alternatives like dlcBTC, tBTC, and Coinbase’s cbBTC are gaining traction.