Sky, a leading decentralized finance protocol, has opted to discontinue its reliance on wrapped Bitcoin (WBTC). This decision came after deliberations with Tron founder Justin Sun and crypto custody firm BiT Global.
Changes in Sky’s Ecosystem
The decision to phase out WBTC was initiated by a governance proposal from the issuer of the DAI stablecoin. According to the proposal, loans backed by WBTC will be gradually removed from the Sky ecosystem. Currently, the value of these loans stands at $200 million.
Why Is BA Labs Concerned?
BA Labs, a risk management consultancy for Sky, has expressed concerns over Justin Sun’s participation in the WBTC project. The firm recommended a complete phased withdrawal from WBTC, insisting on a voting process for each step. Additionally, BA Labs advised incorporating alternative cryptocurrencies as collateral options for Sky.
Key Takeaways from Sky’s Strategy
Sky users have been urged to close their WBTC Legacy Vaults and SparkLend positions. BitGo will become a minority stakeholder in the project, with Justin Sun and BiT Global assuming more control. Coinbase will introduce Coinbase Wrapped BTC (cbBTC) on Ethereum and Base, mirroring Bitcoin on its order book. Sky’s shift away from WBTC is poised to significantly influence the digital asset sphere.
The roles of Justin Sun and BiT Global will become increasingly central to Sky’s risk evaluations. This may prompt users to seek alternative cryptocurrencies, fostering new competitive dynamics and potentially triggering a reassessment of existing regulatory frameworks.
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