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LlamaRisk, Aave's risk service provider, has proposed reducing the loan-to-value (LTV) ratio of BitGo's Wrapped Bitcoin (WBTC) to zero on the DeFi lending platform.
Coinbase launched cbBTC on September 12, and within a week, the token has become the third-largest Wrapped Bitcoin in the market.
Wrapped Bitcoin products allow users to retain asset control while using Bitcoin as collateral for decentralized finance applications.
Sky may be the first of many to toe this path.
Sky, formerly MakerDAO, decided to remove the usage of Wrapped Bitcoin (WBTC) as collateral for borrowing through a governance vote concluded on Sept. 19. BA Labs, the former Risk Core Unit, was named stability advisor for the process.
Sky, a major DeFi lending protocol, has voted to remove wrapped Bitcoin as collateral due to concerns over its custodian's affiliation with Justin Sun
With WBTC being phased out, the protocol is now exploring alternative wrapped Bitcoin solutions.
Sky, formerly known as Maker, is divesting its wrapped Bitcoin following a community governance vote that was finalized on September 19.
The vote was passed with 88% in favor of offloading WBTC collateral from the Sky lending platform.
The matter has been closely followed in crypto markets, since the Sky platform has $200 million of loans collateralized by the token, and since WBTC is one of the biggest cryptocurrencies, with nearly $10 billion outstanding.
This week, Cryptoquant researchers highlighted a new rivalry heating up in the wrapped bitcoin market, with Coinbase's cbBTC stepping up to challenge Bitgo's long-established reign.
Crypto custodian BitGo is set to enter the stablecoin market with plans to launch a dollar-backed USDS stablecoin by 2025, according to a Sept. 18 statement.
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Coinbase recently introduced cbBTC, a wrapped version of Bitcoin designed to integrate with decentralized finance (DeFi) applications on Ethereum and Base networks. This new product aims to expand Bitcoin's utility beyond simple holding or trading, allowing users to participate in various DeFi activities without converting their Bitcoin to other cryptocurrencies.
Sky will begin removing WBTC from its SparkLend platform, with the process starting on September 26 through executive votes.
TL;DR Sky proposes to withdraw WBTC from its loans and collateral due to risks associated with BitGo's custody of the asset. The recent redistribution of BitGo's multi-sig keys to third parties has raised concerns about the security of the underlying BTC.
Coinbase's cbBTC could significantly boost DeFi activities but raises concerns about centralization and security risks in decentralized finance. The post Coinbase Wrapped Bitcoin hits $100M market cap appeared first on Crypto Briefing.
Sky, formerly known as MakerDAO, will implement a multi-step program to unwind WBTC from its Sky Lend and legacy vaults. On October 8, BitGo will transfer custody of the underlying BTC to BitGlobal, raising concerns about counterparty risk.
James Fickel reduces ETH/BTC exposure, swaps 5K ETH for WBTC. Fickel faces $38.5M loss after aggressive ETH/BTC trades.
BitGo, the firm behind WBTC, announced last week that it would become a minority shareholder in its own project, while Justin Sun and BiT Global will be the majority stakeholders.
If approved, the proposal could affect $200 million in DeFi loans within Sky's ecosystem, making it a significant move for the platform.
Sky, formerly MakerDAO, is evaluating the removal of Wrapped Bitcoin from SparkLend over concerns about its ties to Justin Sun.
Tron founder Justin Sun has launched an attack on Coinbase's recently launched variant of wrapped Bitcoin, cbBTC.
The team behind Sky, formerly Maker, wants to drop WBTC due to what it claimed were recent changes in ownership and control “likely involving Justin Sun or affiliates.”
