MakerDAO Considers Removing WBTC Amid Wrapped Bitcoin Restructure

MakerDAO is currently in discussions regarding the possibility of preventing users from creating its DAI stablecoin using Wrapped Bitcoin (WBTC). This decision comes after BitGo, the team responsible for Wrapped Bitcoin, announced intentions to transfer control of WBTC to a joint venture involving BitGo, BiT Global, and Justin Sun’s Tron ecosystem.

A proposal was put forth by BA Labs, a web3 risk and analytics team, on MakerDAO’s governance forum on August 10. The proposal suggested reducing WBTC vault debt ceilings to zero DAI and disabling WBTC borrowing on the SparkLend money market protocol. While these actions would halt new borrowing against WBTC, existing users with outstanding loans or DAI mints collateralized by WBTC would not be immediately affected.

BA Labs raised concerns over Justin Sun’s involvement in the new joint venture managing WBTC. They referenced the decline in operational processes and transparency of TrueUSD, a stablecoin acquired by a Sun-linked entity, following the sale. BA Labs deemed Sun’s controlling interest in the WBTC joint venture as posing an unacceptable level of risk.

The proposal recommended that Maker and Spark consider completely offboarding WBTC if BitGo and related parties cannot convincingly prove the safety of maintaining current collateral integrations. Currently, approximately 10% of DAI’s 5.2 billion token supply is backed by Wrapped Bitcoin, with Maker’s vaults holding $500 million worth of WBTC and users depositing $289.3 million worth of WBTC to SparkLend.

BitGo announced restructuring plans on August 9, with the transition set to occur after a 60-day period. DAI ranks as the third-largest stablecoin after Tether and USD Coin.

Within MakerDAO’s community, opinions on the proposal are divided. Some members, including Maker’s ecosystem team, support BA Labs’ recommendations, while others express reservations. GFX Labs, an analytics provider to MakerDAO, criticized the proposal as extreme, arguing that it deviates from how Maker treats other supported centralized assets.

Various tokenized Bitcoin issuers, such as ckBTC, tBTC, and dlcBTC, are eager to position their products as potential replacements for WBTC. BitGo’s CEO, Mike Belshe, characterized the proposal as a reactionary response to Sun’s involvement and emphasized that BitGo will maintain transaction co-signing and security measures.

Justin Sun responded to concerns about his association with WBTC on social media, clarifying that his role is purely strategic and that he does not control the private keys to WBTC reserves. The price of Maker’s MKR token has experienced a 3.7% decrease in the past 24 hours, according to CoinGecko.