- DeFi protocol Threshold proposes a BitGo merger to address WBTC custody concerns.
- “Concerns” related to Justin Sun’s involvement remain high among DeFi players.
Concerns about BitGo’s WBTC custody appear far from over, despite recent developments adjustments to address perceived “risk issues” related to Justin Sun’s involvement.
In an effort to ‘save WBTC’ and address custody concerns once and for all, Bitcoin DeFi protocol Threshold has proposed decentralizing WBTC before Justin Sun’s involvement with BiT Global.
The protocol, which operates a decentralized version of BTC, tBTC, proposed a merger with BitGo to ensure the “security” 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 goal of multi-jurisdictional and multi-institutional custody.”
Are BitGo’s WBTC changes in custody not enough?
For context, Justin Sun’s control of WBTC custody operations, i.e. the BTC reserve that supports WBTC, continues to raise “concerns.”
Despite BitGo CEO Mike Belshe announcing that Justin Sun’s involvement would not impact WBTC’s operations, some DeFi players such as Threshold have remained cautious.
One of Threshold’s deputies, Ashleycited Sun’s recent removal of 12K BTC from the Tron-based USDD stablecoin reserve as another cause for concern to decentralize WBTC before gaining control of WBTC custody.
“Threshold proposes to decentralize #WBTC before Justin Sun takes control Wrapped BTC 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. That was her 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 welcomed the proposal. One of the users declared,
“It could be a huge win for Threshold, BitGo and the DeFi ecosystem concerned about the new WBTC counterparty risk.”
Profits for Bitcoin DeFi?
Another user and DeFiLlama manager viewed the proposal as equivalent to the acquisition of WBTC. He said it was a great deal because of the WBTC cumulative sales were about $12 million, almost triple Threshold’s offer.
At the time of writing this article, Mike Belshe and Justin Sun had not yet made any public statements about the proposal. So it remains unclear whether they will endorse it or not.