Sky is considering removing Wrapped Bitcoin (WBTC) as collateral from its decentralized finance platform SparkLend, citing concerns about the token’s affiliations with TRON founder Justin Sun.
Proposal Discussions
On September 12, the team behind Sky announced a proposal to offboard WBTC-A, WBTC-B, WBTC-C, and WBTC from SparkLend. The process is expected to start on September 26.
Reasons for the Decision
The decision comes in response to recent developments involving BitGo and its upcoming partnership with BitGlobal. Control of WBTC is expected to shift to a joint venture linked to Sun. Sky also advised users to close their WBTC Legacy Vaults and positions on SparkLend to prevent potential liquidation due to increased risks.
Reactions and Consequences
BitGo CEO Mike Belshe defended the security protocols in place, pointing out that the proposal to offload WBTC “seems to be more a reaction to the Justin Sun name than to facts.” Nonetheless, he admitted that the BitGo team was also “concerned that some would react this way to his [Justin Sun’s] name.”
The ongoing debate surrounding WBTC and Justin Sun's involvement highlights the importance of transparency and risk management in the decentralized finance sector.
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