- Threshold community proposes merging tBTC with WBTC.
- The proposal is pushed by concerns over WBTC’s stability due to Justin Sun’s involvement.
- According to the proposal, BitGo will obtain T tokens, turning into a serious stakeholder in Threshold Network.
In a strategic transfer to defend the way forward for Wrapped Bitcoin (WBTC), a proposal dubbed “#saveWBTC – a merger with Threshold’s tBTC” has been put ahead to merge the decentralized tBTC token of Threshold with BitGo’s WBTC.
The proposal, at present underneath dialogue on Threshold’s forum page, is available in response to rising concerns inside the crypto community concerning WBTC’s stability following BitGo’s partnership with Hong Kong-based BiT Global, an organization partly owned by Justin Sun, founding father of the Tron ecosystem.
Unease with Justin Sun’s involvement with WBTC
The partnership has raised alarms due to Sun’s controversial observe report, with previous incidents of misappropriating collateral. This unease has already led main DeFi protocols like MakerDAO to restrict their publicity to WBTC, halt its use as collateral, and take into account totally offboarding the asset.
Aave, one other important participant within the DeFi house, can also be carefully monitoring the scenario.
The Threshold, WBTC merger proposal
The merger proposal seeks to exchange WBTC’s centralized custody and merchant-based mint and burn mannequin with its decentralized and permissionless mint/redeem mechanism. This transition goals to guarantee the security and stability of the underlying collateral, reassuring customers and protocols reliant on WBTC.
The plan includes granting Threshold’s DAO service provider privileges for WBTC whereas disabling tBTC minting, permitting current tBTC holders to redeem WBTC at a 1:1 ratio.
As a part of the proposal, BitGo would obtain a grant of T tokens, making it the most important stakeholder within the Threshold Network.
The merger can be carried out in levels to guarantee a seamless transition, with a fallback plan to offboard WBTC safely if the proposal is declined.
By combining WBTC’s established consumer base and liquidity with tBTC’s decentralized expertise, Threshold goals to protect WBTC’s position within the DeFi ecosystem, guaranteeing that the concerns over BiT Global’s involvement don’t destabilize the broader market.
