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In light of Justin Sun's increased role, MakerDAO is reviewing its risk management practices as BitGo plans to transfer WBTC custody to a joint venture with BiT Global within the next 60 days.
MakerDAO Reconsiders WBTC Debt Ceilings
An important participant in the decentralized finance (DeFi) space, MakerDAO, is now analyzing how the impending changes to Wrapped Bitcoin's (WBTC) custody would affect its risk management system.
In response to BitGo's announcement that it would be transferring product control to a new joint venture with BiT Global, the governance-focused DAO has taken a more cautious stance. BitGo is a significant WBTC custodian, Coingape reports.
There are a number of potential safeguards that MakerDAO is looking into to reduce the impact of potential changes to Wrapped Bitcoin custody. The present product custodian, BitGo, has updated us on the transfer of control and operational jurisdictions, therefore we thought it was time to examine their progress.
Justin Sun Gains Influence Over WBTC Custody
The partnership with Justin Sun and the Tron ecosystem is a contributing factor to this shift since it will grant Sun a greater degree of power and influence over the WBTC regulatory joint venture. The community is worried since Sun has worked on other cryptocurrency initiatives in the past, including TUSD and Huobi's USDT reserves, which had issues with transparency and operations.
In light of these changes, the company is looking into ways to protect its platform and users from potential harm. Both the on-chain and off-chain governance actions show a cautious approach to the process. Simultaneously, there is a recommendation to drastically cut the share in the company's vaults.
Until the future of custodial frameworks is better understood, it may be necessary to set the debt ceilings on different collateral integrations, such as WBTC-A, B, and C, to zero.
Also, the LTV ratio should be reduced to 0% and the products should no longer be borrowed through SparkLend, another business associated with the company. Risk management is an essential part of DeFi, and these recommended steps demonstrate the firm's efforts in this area. But the executive vote next week is when things are likely to be finalized.
BitGo Expands WBTC Custody Across Asia
The recent announcement by BitGo of the product's transfer of ownership to a new joint venture with BiT Global prompted this MakerDAO response. As part of this new strategy, instead of having custody in the United States, it will be shared across multiple jurisdictions, including Singapore and Hong Kong.
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