Sky Votes on wBTC Removal: $200M in Loans Backed by Token Set for Gradual Phase-Out

• Sky’s decision to phase out wBTC from its ecosystem reflects concerns over Tron’s involvement and aims to mitigate associated risks.
• The gradual removal of wBTC opens opportunities for alternative wrapped Bitcoin solutions to gain market traction in DeFi.

As previously reported by CNF, BitGo and TRON (TRX) announced that investors can now use wrapped Bitcoin (wBTC) and wrapped Ethereum as TRC-20 tokens on the TRON blockchain.

Sky, formerly known as MakerDAO, is preparing to remove wrapped Bitcoin (wBTC) from its lending ecosystem, a major decision that could impact over $200 million in collateralized loans.

According to an official tweet from Sky, the offboarding process, initiated by BlockAnalitica, will begin with an Executive Vote on September 26, 2024, subject to governance approval.

If you are a user with WBTC collateral in Legacy Vaults (WBTC-A, WBTC-B, or WBTC-C) or SparkLend, please be aware of the WBTC offboarding proposal initiated by @BlockAnalitica.

According to the plan outlined by @BlockAnalitica, and pending governance approval, WBTC offboarding…

— Sky (@SkyEcosystem) September 12, 2024

Users with wBTC collateral in Legacy Vaults and SparkLend are encouraged to close their positions to prepare for the upcoming changes.

This move comes after BA Labs, a key governance player, raised concerns over Justin Sun’s involvement in the custodianship of wBTC assets. BA Labs proposed a five-step plan to gradually remove wBTC from the platform. The decision was driven by fears that legal due diligence wouldn’t sufficiently mitigate risks associated with Tron’s involvement, prompting Sky to reduce its reliance on wBTC.

Competition Emerges as Alternatives Gain Traction

As Sky transitions away from wBTC, alternative wrapped Bitcoin options are beginning to rise in popularity. Options like dlcBTC, tBTC, and FBTC are gaining momentum as potential replacements for wBTC in the DeFi space. As reported by CNF today, Coinbase has also entered the market, launching its own wrapped Bitcoin product. According to CoinMarketCap data, Bitcoin (BTC) is trading at $58,079.34, down 0.20% in the last few days and up 4% in the past week. See BTC price chart below for further details about Bitcoin market performance during this development.