The post Sky ecosystem proposes to vote on off-boarding risky WBTC appeared on BitcoinEthereumNews.com.

Sky, formerly known as MakerDAO, announced a vote to divest WBTC from all its loan and collateral facilities. Removing WBTC was discussed earlier as a form of risk mitigation due to uncertainties with the asset’s multi-sig wallets.  Spark Lend and Sky, formerly MakerDAO, will remove WBTC from its asset mix after a community vote. The call to remove WBTC from the mix comes after the asset’s custodian, BitGo, decided to redistribute three of the multi-sig wallets to third-party institutions. The handover of some of the multi-sig keys is expected on October 8, and Sky will try to de-risk collaterals by that point.  WBTC has been a significant source of yearly earnings from vaults, but is now considered at risk of contagion or loss of reputation for Sky and Spark Lend.  In the initial stage, users will be able to unwind their loan positions. But Sky is dedicated to erasing all WBTC from its debts, so a second stage has been proposed, where the conditions for liquidations will become more strict, force-liquidating all outstanding loans. In the worst-case scenario, Sky will liquidate all outstanding loans in the span of three weeks.  The voting proposal coincided with the live launch of Coinbase BTC (cbBTC) on September 12. The asset will be available to replace the positions on Sky Lend. There have always been attempts to create new forms of wrapped tokens, though most are considered riskier and are less active. Wrapping BTC is a compromise decision, which creates significant counterparty risk. The worries come from BitGo’s decision to partner with Tron’s founder, Justin Sun. BitGo has claimed Sun has no way of moving or controlling the underlying BTC reserves. However, Sky still decided to move to Coinbase-wrapped BTC (cbBTC). Justin Sun has denied any control over private keys or the ability to…

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Filed under: News - @ September 13, 2024 9:21 am