Justin Sun confirms no changes in WBTC custody, with BitGo and BitGlobal maintaining control and real-time audits.
MakerDAO may reduce WBTC exposure amid concerns over Justin Sun's involvement and BitGo's custodial changes.
WBTC's price surged 1.02% as MakerDAO reviews its risk management strategy in response to Sun's involvement.
Justin Sun clarified that the custodial protocols are unaltered in response to questions raised recently about his involvement with Wrapped Bitcoin (WBTC). Sun clarified that the audits for WBTC remain real-time, accessible via the WBTC network, and fully managed by custodians BitGlobal and BitGo. He made it clear that his involvement is entirely strategic and that he has no control over WBTC finances.
https://twitter.com/justinsuntron/status/1822370692014485937 MakerDAO's Risk Mitigation Strategies
However, MakerDAO is considering several measures to lower the risks related to WBTC custody. This review follows BitGo's announcement of transferring ownership of WBTC operations to a new joint venture with BitGlobal. This shift will see custody operations move from the U.S. to jurisdictions like Hong Kong and Singapore.
The MakerDAO community's concern arises from Sun's previous associations with other crypto projects, including TUSD and Huobi's USDT reserves, which faced transparency and operational challenges.
In light of this, MakerDAO is exploring ways to protect its platform and users from potential risks. Consequently, the on-chain and off-chain governance actions reflect a cautious approach to this transition.
Impact on WBTC's Market Performance
Moreover, there is a proposal to significantly reduce the share of WBTC in the firm's vaults. This could involve setting debt ceilings on various WBTC collateral integrations, such as WBTC-A, B, and C, to zero until the custodial framework is better understood. Additionally, the firm is considering halting product borrowing through SparkLend, a service associated with the company, and reducing the loan-to-value (LTV) ratio to 0%.
These steps underscore MakerDAO's commitment to risk management in decentralized finance (DeFi). However, final decisions are expected during the upcoming executive vote next week. The outcome of this vote could impact the operational landscape of WBTC within the DeFi ecosystem.
WBTC has seen a bullish bounce, with the last day seeing price swings between $61,153.79 and $60,176.32. At the time of writing, WBTC was up 1.02% from its support level, trading at $61,026.86. This price movement reflects market sentiment as the community closely watches developments in WBTC custody and governance.
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