Sky, a decentralized finance (DeFi) lender, has decided to temporarily pause its plan to offboard wrapped bitcoin (WBTC) as collateral, following a discussion with BitGo CEO Mike Belshe.
The decision comes after an influential adviser, BA Labs, expressed concerns about the involvement of Tron founder Justin Sun in the new custody arrangement for WBTC. Sun’s involvement raised questions about the security and control of the collateral.
Despite an overwhelming vote by the Sky community to proceed with the offboarding process, recent discussions with Belshe have provided additional clarity and addressed some of the concerns. Belshe clarified that Sun would not have the ability to unilaterally make changes to the key management practices at BitGo or BitGo Singapore.
BA Labs, after considering these additional details, has recommended pausing the collateral offboarding procedures. The advisor noted that the current exposure to WBTC collateral has decreased to a more acceptable level, reducing the immediate risk.
While concerns about BitGlobal serving as a signer for WBTC remain, BA Labs believes that the situation is no longer critical enough to warrant immediate offboarding.
The drama surrounding WBTC has led to increased interest in alternative wrapped bitcoin options, such as dlcBTC, tBTC, and FBTC. Coinbase has also recently launched its own wrapped bitcoin competitor, cbBTC.y
