Sky (formerly MakerDAO) advisor BA Labs has made a significant shift in its stance today, proposing a slight reduction in the liquidation threshold parameter for WBTC from 75% to 70%, instead of the proposed 0% in August. They have also recommended indefinitely postponing the delisting process for WBTC.
According to CoinDesk, BA Labs has reconsidered the delisting process for WBTC after gaining a better understanding of its operational and management aspects. They stated, “While we still have concerns about BitGlobal as the signer of WBTC, we believe the severity of the issue has been greatly reduced and delisting is not necessary at this time.” Ultimately, BA Labs recommended indefinitely postponing the delisting process for WBTC.
In their statement released this Tuesday, BA Labs mentioned, “After learning more details, we have a clearer understanding of WBTC’s current operational model and primary management, which has increased our confidence.” BA Labs believes that the exposure of WBTC as a collateral asset has “decreased slightly, accounting for approximately $170 million in total borrowings,” thus reducing the associated risks to a “more acceptable range.”
In previous reports, BA Labs proposed gradually reducing the liquidation threshold (LT) parameter for WBTC from 75% to 0% on August 22, sparking discussions about Sky’s removal of WBTC from its platform. On September 25, BA Labs proposed adjusting the parameter from 75% to 70% and making various adjustments to the supply and borrowing limits, effectively reversing their previous plan to remove WBTC. If the new proposal is approved, there will only be a symbolic 5% change.
BA Labs also specifically mentioned that they no longer recommend implementing any further parameter changes, and future recommendations for parameter changes (if any) will depend on market conditions and the fundamental factors of WBTC.
CoinDesk reported that due to the impact of Sky’s previous plan to remove WBTC, several competing products have emerged in the industry, including dlcBTC, tBTC launched by Threshold, and FBTC supported by Mantle Network. On September 12, Coinbase, the largest cryptocurrency exchange in the United States, officially launched its wrapped Bitcoin cbBTC through its custody platform.
Within a week, cbBTC became the third-largest wrapped Bitcoin, but its actual market share was only 1.5%, far behind WBTC’s 66% market share.
At the same time, cbBTC has been questioned by many market participants for its lack of transparency and failure to provide Proof of Reserves (PoR). Coinbase has also refused to disclose the reserve address of cbBTC on the Bitcoin network, preventing users from remotely verifying the existence of Bitcoin reserves on the blockchain.
CryptoQuant, an authoritative research platform, revealed in an analysis report that “some critics point out that administrators of the cbBTC smart contract can blacklist certain addresses, prohibiting these addresses from conducting transfers, minting, or burning cbBTC. This means that assets held by cbBTC users may be frozen.”
Following Sky, there have been rumors of the DeFi platform AAVE proposing the delisting of WBTC. On the 20th, AAVE co-founder Stani Kulechov responded to these rumors, stating, “This is incorrect. AAVE has not eliminated WBTC. It was a proposal to limit WBTC made by one of the risk providers.”
After BA Labs’ revised proposal, it is difficult for the DeFi platform to challenge WBTC further, and WBTC will continue to maintain its dominant position. According to CryptoQuant’s report, earlier this month, BitGo, WBTC’s custodian, started adopting LayerZero’s Omnichain Fungible Token (OFT) standard on Avalanche and BNB Chain, allowing WBTC to be used across multiple blockchain networks.