Sky, the decentralized finance platform (DeFi) formerly known as MarkerDAO, appears to have backtracked on its plan to remove the Wrapped Bitcoin (WBTC) cryptocurrency as collateral for users to obtain loans, following clarifications from BitGo CEO Mike Belshe.
The executive spoke out on an issue that had caused a stir in the Sky community: Justin Sun’s recent insertion (founder of the Tron network) in controlling the custody and security of the assets backing WBTC.
BitGo, a company dedicated to the security and trust of digital assets, was the sole custodian of the bitcoin (BTC) deposits that served as collateral for WBTC. As of August 2024, They concretized an agreement to reformulate the custody of these assetswhich included the founder of Tron, through a deal between BitGo and BiT Global.
Custody was thus transferred to this partnership, in which BiT Global, related to Sun, participated in the management of the assets backing WBTC, equivalent to approximately 200 million dollars.
This agreement caused an advisor to the Sky company, BA Labs, to express his concern about the incorporation of Sun and that had excessive influence on custody from WBTC and suggested the removal of the token as a guarantee. In addition, on September 16, The Sky community voted very favourably for that action to be completed, following the assessments of BA Labs.
However, the most recent Belshe’s statements On the Sky forum, the waters calmed down a bit. The CEO clarified that Sun would not have the ability to modify the asset custody structure on his own, nor would he have direct control over the WBTC management keys. This reassured some members of the Sky community.
In response to Belshe’s remarks, BA Labs emphasized at the forum that he is “more comfortable with the current state of WBTC’s operations and key management.” He also delved into two segments linked to the administration of these assets.
“BitGlobal currently has no control over a quorum of signing keys, nor the ability to take control of them without the cooperation of BitGo and/or BitGo SG. They agree to provide advance public notice of changes in asset management or custody, similar to the 60-day notice provided for the current changes.”
BA Labs, advisor to the Sky platform.
As reported by CriptoNoticias, on September 26, 2024, the executive vote will be held on whether or not Sky should remove WBTC as collateral. However, following Belshe’s clarifications and the response from Sky’s advisor, BA Labs, The plan to eliminate WBTC could be reversed in a future vote.
How to use WBTC on Sky?
Sky allows users to originate loans and other financial products without the need for traditional intermediaries, using cryptocurrency collateral. These collaterals refer to the digital assets that users deposit as collateral to secure a loan.
One of the assets Sky uses as collateral is WBTC, which is a tokenized version of bitcoin (BTC) that is compatible with other networks, such as Ethereum (ETH). WBTC is created by depositing bitcoin in a custodianin this case BitGo, who issues an equivalent amount of WBTC on Ethereum.
WBTC serves as a bridge between the value of Bitcoin and the DeFi ecosystem on Ethereum, allowing users to participate in protocols DeFi with the value of their bitcoins without having to sell them or convert them into Ethereum directly.
By depositing WBTC on platforms like Sky, users can obtain loans or engage in other financial activities, such as yield farming either stakingusing WBTC as collateral.