MakerDAO is currently evaluating whether or not to halt the minting of its DAI stablecoin using Wrapped Bitcoin (WBTC) as collateral. This discussion has emerged following an announcement from BitGo, the team responsible for WBTC, about a restructuring that would transfer control of WBTC to a new joint venture that includes BiT Global and Justin Sun’s Tron ecosystem. On August 10, BA Labs proposed on MakerDAO’s governance forum to reduce WBTC vault debt ceilings to zero and disable WBTC borrowing on SparkLend. This proposal aims to stop new borrowing against WBTC, but it won’t immediately affect users with existing loans or DAI already minted with WBTC as collateral.
The main concern driving this proposal is Justin Sun’s involvement in the new joint venture managing WBTC. BA Labs highlighted issues with TrueUSD, a stablecoin linked to Sun, which faced operational and transparency problems after being sold to a Sun-affiliated group. These issues included the suspension of real-time proof of reserves, price volatility, and disrupted redemption services. BA Labs argues that Sun’s involvement in the new WBTC management poses a significant risk to MakerDAO. They suggest fully offboarding WBTC unless BitGo and its partners can demonstrate the safety of the current collateral arrangements.
Currently, around 10% of DAI’s 5.2 billion token supply is backed by WBTC, with MakerDAO’s vaults holding $500 million worth of the token. Additionally, $289.3 million worth of WBTC is deposited in SparkLend, accounting for 7% of the protocol’s total value locked. The BitGo restructuring is set to take effect after 60 days following the announcement made on August 9. This potential restructuring poses implications for DAI, currently the third-largest stablecoin behind Tether and USD Coin, and has sparked a debate within the MakerDAO community.
Some members of the MakerDAO community, including Maker’s ecosystem team, support BA Labs’ recommendations, while others express reservations. GFX Labs described the proposal as “extreme,” arguing that it would be inconsistent with how Maker handles other centralized assets. Sparkuser dismissed the proposal as an overreaction. In response to the proposal, rival tokenized Bitcoin issuers like ckBTC, tBTC, and dlcBTC have begun pitching their products as potential alternatives to WBTC. BitGo’s CEO, Mike Belshe, criticized the proposal, calling it a knee-jerk reaction to Sun’s involvement.
Despite reassurances from Belshe that BitGo would continue to co-sign transactions and maintain the security of WBTC, BA Labs remained unconvinced due to a lack of transparency in BitGo’s announcement. They requested detailed information about BiT Global, its directors, ownership structure, and the rationale behind the restructuring. Belshe suggested that MakerDAO conduct due diligence through a formal non-disclosure agreement. Justin Sun also addressed concerns about his involvement, stating that his role in WBTC is strategic and that he does not control the private keys to WBTC reserves.
