Originally known as Maker, Sky is rethinking its choice to offboard wrapped bitcoin (WBTC) from its lending platform following a new advice from one of its main advisers, BA Labs. The action follows BitGo, the main WBTC custodian, who also highlighted the company’s openness and administration and custody of WBTC’s signature keys.
Following a thorough conversation with BitGo’s co-founder, Mike Belshe, on Sky’s governance forum, BA Labs advised on September 24 stopping the offboarding process. BitGo reiterated its promise to notify the Sky community at least 60 days in advance of any custody changes for WBTC, therefore guaranteeing their informed state.
This news follows worries over BitGo’s recent alliance with BitGlobal, connected to Justin Sun, Tron creator. Previously, the alliance had resulted in a governance vote on September 19 which 88% of the Sky community voted in support of offboarding WBTC in a phased, five-step procedure beginning in October. But following fresh guarantees from BitGo and lessening of Sky’s WBTC exposure—now down to $170 million—BA Labs has changed its position and decided that the collateral risk is now more under control.
Although certain questions still surround BitGlobal’s involvement, BA Labs recommended stopping the offboarding indefinitely as instantaneous action is no more required. Sky will gather an executive vote on October 3 to decide the new suggestion.
Belshe voiced annoyance at the possible relocation to Coinbase’s cbBTC, a centralized asset devoid of the BitGo proof-of-reserves (POR) requirement. He said that the change may expose Sky’s platform to uncollateralized risk worth a billion dollars, thereby making the transfer perhaps more risky.
Apart from reevaluating the offboarding, Sky is also looking at its liquidation rules. BA Labs has suggested changes include decreasing liquidation penalties, changing ratios, and cutting costs for its Legacy Vaults and SparkLend lending products. The outcome of the next referendum will decide the direction Sky’s collateral policies will take in their development.
