- DeFi protocol Threshold proposes a BitGo merge to address WBTC custody concerns.
- “Concerns” linked to Justin Sun’s involvement remain at large amongst DeFi players.
BitGo’s WBTC custody concerns seem far from over, despite recent adjustments to address perceived “risk issues” related to Justin Sun’s involvement.
In a move aimed to “save WBTC” and address the custody concerns once and for all, Bitcoin DeFi protocol Threshold has proposed decentralizing WBTC before Justin Sun’s BiT Global involvement.
The protocol, which operates a decentralized wrapped BTC version, tBTC, proposed a merger with BitGo to ensure the “safety” of WBTC. Part of the proposal read,
“Combining WBTC’s user base, integrations, liquidity, and brand recognition with tBTC’s decentralized custody and permissionless bridging mechanism can better achieve BitGo’s stated objective of multi-jurisdictional and multi-institutional custody.”
Is BitGo’s WBTC custody changes not enough?
For context, Justin Sun’s control in the WBTC custody operations, i.e., the BTC reserve that backs WBTC, has continued to raise “concerns.”
Despite BitGo’s CEO, Mike Belshe, announcing that Justin Sun’s involvement wouldn’t affect WBTC operations, some DeFi players, like Threshold, have remained cautious.
One of Threshold’s delegates, Ashley, cited Sun’s recent removal of 12K BTC from the Tron-based USDD stablecoin reserve as another cause of concern to decentralize WBTC before he gains control of WBTC custody.
“Threshold proposes decentralizing #WBTC before Justin Sun takes control of the WrappedBTC kingdom.”
Ashley also added that Maker [MKR] and Aave [AAVE] have already implemented risk mitigation and plan to reduce their exposure to WBTC despite Belshe’s assurances. She was convinced that the proposal would address these concerns.
“The proposal aims to address these concerns and ensure the continued stability of WBTC in the crypto ecosystem.”
The Threshold proposal involves BitGo moving WBTC to its decentralized network in exchange for 15% of its native token, T, which is worth about $36 million at current market prices.
Some hailed the proposal. One of the users stated,
“Could be a huge win for Threshold, BitGo, and the DeFi ecosystem concerned about new WBTC counterparty risk.”
Win for Bitcoin DeFi?
Another user and DeFiLlama executive viewed the proposal as equivalent to WBTC acquisition. He said it was a great deal because WBTC’s cumulative revenues were about $12 million, almost triple Threshold’s offer.
At the time of this writing, Mike Belshe and Justin Sun had not publicly made any statements regarding the proposal. So, it remains unclear whether they will endorse it or not.
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