MakerDAO is considering limiting the DAI minting with Wrapped Bitcoin (WBTC) as collateral.
The discussion has emerged after BitGo, the team behind WBTC, announced a restructuring plan to transfer control of WBTC to a new joint venture involving BiT Global and Justin Sun’s Tron ecosystem.
BA Labs proposed on MakerDAO’s forum to reduce WBTC vault debt ceilings to zero and disable WBTC borrowing on SparkLend. This would halt new borrowing but not affect existing loans, or DAI minted with WBTC as collateral.
Justin Sun’s involvement poses risks
The proposal is driven by concerns about Justin Sun’s involvement. BA Labs noted issues with TrueUSD, a stablecoin linked to Sun, which experienced operational problems and volatility after being sold to a Sun-affiliated group.
BA Labs argues that Sun’s involvement in WBTC management risks MakerDAO and suggests offboarding WBTC unless BitGo and its partner can ensure collateral safety. Currently, WBTC backs about 10% of DAI’s $5.2B token supply, with MakerDAO holding $500M.
Additionally, $289.3M in WBTC, or 7% of SparkLend’s $4.1B total value locked, is at stake. On August 9, BitGo announced its restructuring plans, with the transition scheduled to take place after 60 days. This may impact DAI, the third-largest stablecoin.
Divided community on the proposal
The proposal has divided the MakerDAO community. While some, including Maker’s ecosystem team, back BA Labs’ recommendations, others, like GFX Labs, criticize it as “extreme” and inconsistent with Maker’s handling of centralized assets.
Another community member, Sparkuser, dismissed the proposal as an overreaction. In response, rival Bitcoin issuers like ckBTC, tBTC, and dlcBTC are pitching alternatives to WBTC.
BitGo CEO Mike Belshe criticized the proposal as a knee-jerk reaction and assured that WBTC’s security remains unchanged.
They requested details on BiT Global’s structure and the restructuring rationale. Belshe suggested using a non-disclosure agreement for this. Moreover, Justin Sun clarified that his role in WBTC is strategic and doesn’t control the private keys WBTC reserves.
Related | BitGo shifts Wrapped Bitcoin to multi-jurisdiction custody
