Sky Proposes Full Offboarding of Wrapped Bitcoin Due to Justin Sun Controversy

Published: Sep 13, 2024
Written By:
Sebastian Gamez
Sebastian Gamez
Milk Road Writer

Sky (formerly Maker) plans to remove Wrapped Bitcoin ($WBTC) as collateral due to concerns over Justin Sun’s involvement in the asset’s restructuring.

Key points:

  • Proposal from BA Labs: Sky is considering fully offboarding $WBTC.
  • Justin Sun’s alleged control: Concerns about Sun’s hidden influence over $WBTC.
  • Offboarding plan: Gradual liquidation increases to minimize user impact.
  • Sky’s $WBTC exposure: $73M in $WBTC collateral, supporting 127M $DAI.
  • Suggested alternatives: Consideration of $cbBTC and $tBTC as replacements.

Sky’s Move to Cut Ties with WBTC Over Justin Sun Concerns:

Sky, formerly known as Maker, is preparing to sever ties with Wrapped Bitcoin ($WBTC).

This decision stems from concerns related to Justin Sun’s potential control over $WBTC’s restructuring.

A proposal from BA Labs, posted to Sky’s governance forum, claims that Sun or his affiliates may secretly control BitGlobal, one of the entities taking over $WBTC.

BitGo, $WBTC’s issuer, announced plans to hand control to a joint venture with BitGlobal, which would partner with Sun’s Tron ecosystem.

However, BA Labs raised alarms about the lack of transparency and the risks this poses. To address these concerns, Sky plans to offboard $WBTC by October 8, 2024, coinciding with the restructuring timeline.

Currently, $WBTC accounts for $73M in collateral on Sky’s platform, supporting 127M $DAI.

Read more: Maker Rebrands to Sky and Prepares for USDS Stablecoin Launch

It also contributes $15M in annual revenue to the project. To prevent disruptions, Sky will gradually increase the liquidation thresholds, giving users time to adjust.

In the meantime, Sky is exploring alternative assets. These include Coinbase’s $cbBTC and Threshold’s $tBTC, both of which could potentially fill the gap left by $WBTC.

This shift may provide Sky with more secure and diversified options moving forward.

Sebastian Gamez

Sebastian has been immersed in the crypto space since 2021, specializing in research and building a deep understanding of blockchain technologies. His expertise includes exploring innovative trends and sharing insights through content creation, all driven by his passion for how crypto can reshape industries and unlock new possibilities for the future.

Sebastian Gamez
Sebastian Gamez
Milk Road Writer
Sebastian has been immersed in the crypto space since 2021, specializing in research and building a deep understanding of blockchain technologies. His expertise includes exploring innovative trends and sharing insights through content creation, all driven by his passion for how crypto can reshape industries and unlock new possibilities for the future.