Ethereum

Aave

2024

Bitcoin

DeFi

<h4>What if you have Bitcoin and you want to make it work for you in DeFi? There is no convenient way to do it. Using Bitcoin on Ethereum is not available. However, there is a solution. It’s called $wBTC. It’s wrapped Bitcoin, an ERC-20 token. $wBTC is 100% backed by $BTC. The custodian for this $9 billion market cap token is BitGo. However, they recently announced a change in management for $wBTC to BiT Global. That should happen within 60 days.</h4> 
This happened on 9th August. Since that announcement, a lot of things have happened with $wBTC. So, let’s take a closer look at this. 
<h5>What Is the Original BitGo Announcement About $wBTC?</h5> 
The original <a href="https://blog.bitgo.com/bitgo-to-move-wbtc-to-multi-jurisdictional-custody-to-accelerate-global-expansion-plan-2ea0623fa2c8" target="_blank" rel="noopener">BitGo announcement</a> about $wBTC seemed fair enough. It announced its move to BiT Global, a Hong Kong based entity. This also means a new custody setup. This joint venture included BiT Global and the Tron ecosystem. Now, Justin Sun heads Tron, and his reputation isn’t that great. That’s one concern. More on this in a moment. 
<blockquote class="twitter-tweet"> 
 BitGo is pleased to announce the move of its WBTC business to the world’s first multi-jurisdictional and multi-institutional custody via a unique partnership and joint-venture with BiT Global. 
 This upgrade will occur 60 days from today with no disruption or interruptions to… <a href="https://t.co/yNUoyTwsqL">pic.twitter.com/yNUoyTwsqL</a> 
 — BitGo (@BitGo) <a href="https://twitter.com/BitGo/status/1821927623494439130?ref_src=twsrc%5Etfw">August 9, 2024</a>
</blockquote> 
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>Another concern was that 2 of the 3 multi-sig keys were in the hands of BiT Global. This concern is easy to understand. There’s a $wBTC multi-sig wallet that has three keys. To sign a transaction, you only need two keys. This means that BiT Global, having two keys, centralizes power over $wBTC.&nbsp; 
However, the above-mentioned concern about the multi-sig keys is no more. After enough backlash from the DeFi community, BitGo changed the key distribution. This happened on 14th August. The new change sees the three keys now distributed. There are also 3 jurisdictions, being the US, Hong Kong, and Singapore. So, here’s the new key distribution. 
<ul> 
 <li>BitGo Inc. secures 1 key&nbsp;</li> 
 <li>BiT Global secures 1 key&nbsp;</li> 
 <li>BitGo Singapore Ltd. secures 1 key </li> 
</ul> 
<blockquote class="twitter-tweet"> 
 We co-hosted a WBTC community discussion last night on X Spaces with <a href="https://twitter.com/weremeow?ref_src=twsrc%5Etfw">@weremeow</a>, <a href="https://twitter.com/loi_luu?ref_src=twsrc%5Etfw">@loi_luu</a>, <a href="https://twitter.com/mikebelshe?ref_src=twsrc%5Etfw">@mikebelshe</a>. Thank you to the hundreds who participated live and the thousands who tuned in after. 
 BitGo recapped the WBTC new multi-jurisdictional, multi-institutional custody transition… <a href="https://t.co/dObsuoVO3i">pic.twitter.com/dObsuoVO3i</a> 
 — BitGo (@BitGo) <a href="https://twitter.com/BitGo/status/1823751918575095854?ref_src=twsrc%5Etfw">August 14, 2024</a>
</blockquote> 
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> 
This change addressed the immediate centralization concern. However, this still leaves some reasons for concern. 
For example, on the 10th of August, <a href="https://forum.makerdao.com/t/wbtc-changes-and-risk-mitigation-10-august-2024/24844" target="_blank" rel="noopener">MakerDAO</a> stops new $wBTC-backed loans. It’s discussing completely off-boarding $wBTC. This was their immediate answer to their BitGo concerns. On the other hand, <a href="https://www.altcoinbuzz.io/?s=aave" target="_blank" rel="noopener">Aave</a> will make no immediate changes for at least two months. That’s the 60-day wait period. Currently, there’s no alternative to $wBTC. As we already saw, it’s also worth billions in collateral across <a href="https://www.altcoinbuzz.io/category/defi/" target="_blank" rel="noopener">DeFi</a>. 
<blockquote class="twitter-tweet"> 
 Addressing wBTC &lt;&gt; Aave concerns: 
 1) wBTC users are legitimate. Aave values its users. I won’t vote to rug anyone overnight. 
 2) Aave is a DAO. No single entity can unilaterally decide the fate of a collateral, especially one worth billions. 
 3) We’ve successfully replaced wBTC… 
 — Marc “Billy” Zeller <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f47b.png" alt="👻" class="wp-smiley" style="height: 1em; max-height: 1em;"> <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f987.png" alt="🦇" class="wp-smiley" style="height: 1em; max-height: 1em;"><img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f50a.png" alt="🔊" class="wp-smiley" style="height: 1em; max-height: 1em;"> (@lemiscate) <a href="https://twitter.com/lemiscate/status/1823057040811442386?ref_src=twsrc%5Etfw">August 12, 2024</a>
</blockquote> 
<h5><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>Why Is Justin Sun So Controversial?</h5> 
Justin Sun’s reputation is controversial. So, his being part of BiT Global raised concerns. Especially when, at some stage, it looked like BiT Global had control over two out of the three multi-sig keys. So, here are some reasons why Sun is so controversial. 
He doesn’t have a good track record about being transparent. For instance, his track record with collateral is poor. Let’s take a look at $TUSD. In September 2023, <a href="https://blockworks.co/news/justin-sun-tusd-mint" target="_blank" rel="noopener">Sun printed over $815 million in $TUSD</a>. At that moment, $TUSD was not much used. Within 15 minutes, this new fund ended up in a Huobi hot wallet. Now, Sun is controlling Huobi (HTX).&nbsp; 
This is all legit, until you know that Huobi turned off its Proof of Reserves in January 2024. As a result, there was no way of knowing how the $TUSD minting was <a href="https://thecryptobasic.com/2023/09/18/justin-sun-mints-815m-in-trueusd-raising-concerns-over-stablecoin-collateralization/" target="_blank" rel="noopener">backed by collateral</a>. Quite a few shady things are going on here. However, Huobi turned its Proof of Reserves on again. You can check these <a href="https://dune.com/21co/proof-of-reserves-htx" target="_blank" rel="noopener">Dune statistics</a>. 
Now, this shows the potential issue if BiT Global would have access to two of the three multi-sig keys. Justin Sun would potentially be in a position to access the $wBTC funds. This could lead to regulatory issues. In turn, this could put the entire WBTC ecosystem at risk. A $9 billion fund at the fingertips of Justin Sun is a scary thought. In contrast, BitGo has its funds sitting there. It doesn’t lend or borrow against it or use it for leverage. They’re transparent and show their Proof of Reserves. 
The DeFi community trusts $wBTC. The involvement with a controversial person like Sun could take this trust away. It could lead to a mass exodus of wrapped $BTC. 
<h5>Reactions by Competitors</h5> 
It didn’t take long for competitors to react to the BitGo announcement. A clear sample is <a href="https://www.altcoinbuzz.io/?s=coinbase" target="_blank" rel="noopener">Coinbase</a> announced their $cbBTC on 13th August. This may sound like a good alternative. However, is it? Well, maybe not. For instance, Coinbase doesn’t offer Proof of Reserve of its holdings. This is not a good basis to trust your hard-earned $BTC to them. 
Now, in all fairness, most BTC derivatives are unfortunately centralized! However, BitGo’s track record with $wBTC is good. As already pointed out, BitGo is transparent. 
<img decoding="async" class="aligncenter wp-image-148614 size-full" src="https://www.altcoinbuzz.io/wp-content/uploads/2024/08/FireShot-Pro-Webpage-Capture-526-Coinbase-🛡-@coinbase-_-X-x.com_.png" alt="$wBTC" width="740" height="235" srcset="https://www.altcoinbuzz.io/wp-content/uploads/2024/08/FireShot-Pro-Webpage-Capture-526-Coinbase-🛡-@coinbase-_-X-x.com_.png 740w, https://www.altcoinbuzz.io/wp-content/uploads/2024/08/FireShot-Pro-Webpage-Capture-526-Coinbase-🛡-@coinbase-_-X-x.com_-300x95.png 300w, https://www.altcoinbuzz.io/wp-content/uploads/2024/08/FireShot-Pro-Webpage-Capture-526-Coinbase-🛡-@coinbase-_-X-x.com_-696x221.png 696w" sizes="(max-width: 740px) 100vw, 740px"> 
Source: <a href="https://x.com/coinbase" target="_blank" rel="noopener">X</a> 
<h5>Conclusion</h5> 
BitGo is the custodian of $wBTC. It surprised the crypto and DeFi world with a change of custodial course. This involved BiT Global, a firm that Justin Sun has ties with. He has a bad track record with transparency and collateral. Hence, this raised concerns. There’s a 60-day waiting period before the custodial change takes place. During this period, everything will still be fine. Once custody changes, it’s worth keeping an eye out on proceedings. 
<a href="https://www.patreon.com/altcoinbuzz" target="_blank" rel="noopener"><img decoding="async" class="alignnone wp-image-123700 size-full" src="https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner.jpg" sizes="(max-width: 1197px) 100vw, 1197px" srcset="https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner.jpg 1197w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-300x37.jpg 300w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-1024x127.jpg 1024w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-768x95.jpg 768w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-696x86.jpg 696w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-1068x132.jpg 1068w" alt="Injective" width="1197" height="148"></a> 
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The post <a href="https://www.altcoinbuzz.io/bitcoin-and-crypto-guide/whats-going-on-with-wbtc/">What’s Going on With $wBTC?&nbsp;</a> appeared first on <a href="https://www.altcoinbuzz.io">Altcoin Buzz</a>.

What’s Going on With $wBTC?

Altcoin Buzz

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