MakerDAO Vaults Remove WBTC as Collateral, Setting Debt Ceiling to Zero Amid BitGo's Partnership With BiT Global and Concerns Over Justin Sun's Influence

MakerDAO governance has finally decided the use of Wrapped Bitcoin (WBTC) as collateral. In a vote, the MakerDAO community agreed to set the WBTC debt ceiling to zero.

MakerDAO has set the WBTC debt ceiling to zero, effectively halting new loans backed by Wrapped Bitcoin (WBTC) amid concerns over BitGo's partnership with BiT Global and Justin Sun's influence in the matter.

In a recent governance vote, the MakerDAO community decided to set the WBTC debt ceiling to zero, which means that no new loans backed by WBTC can be issued. The loan-to-value (LTV) ratio for WBTC has also been set to 0%.

This move comes after BitGo, the custodian of WBTC, announced a new partnership with BiT Global, which has links to Justin Sun. Some members of the MakerDAO community have raised concerns about the security of WBTC in light of this partnership.

The latest Executive Vote has been approved by Maker Governance.→ https://t.co/Y968n3VZW6The following changes were executed within the Maker Protocol on August 15th at 13:24 UTC:? WBTC Vault Debt Ceiling Reductions• WBTC-A, WBTC-B, and WBTC-C were removed from the… pic.twitter.com/kJHaWY3tEt

However, the decision does not impact the existing WBTC-backed loans in any way. The current positions' liquidation threshold remains unchanged, so borrowers with outstanding loans will not face an immediate threat to their collateral.

This policy ensures that no new loans are provided against WBTC, while the existing ones are not to be affected.

MakerDAO Concerns Over BitGo's Partnership

The community decided to suspend new WBTC-backed loans after BitGo disclosed its plans to move WBTC custody from the United States to Singapore and Hong Kong as part of its collaboration with BiT Global.

The partnership raised concerns because of Sun's involvement and the possibility of him controlling WBTC custody, which could pose new risks to the ecosystem.

To this end, BitGo's CEO, Mike Belshe, attempted to alleviate these concerns in a chat, stating that neither Justin Sun nor any other party would have control over the WBTC assets.

According to him, the keys would be distributed between BitGo's entities in the U.S. and Singapore and BiT Global. This statement did not completely assuage the anxiety within the MakerDAO community, and as a result, new borrowing against WBTC was to be discontinued.

Focus on Stability and Security in DeFi

By deciding to halt new WBTC-backed loans, MakerDAO has demonstrated a way of dealing with risk in the decentralized finance (DeFi) environment. With the new debt ceiling, MakerDAO aims to shield its community from risks that could be posed by shifts in WBTC's custodianship.

This decision aligns with the commitment to preserving the stability and security of Maker's lending process, including the proper evaluation of collateral.

In other DeFi news, Grayscale Investments announced the launch of the Grayscale MakerDAO Trust, which will allow investors to invest in the governance token of MakerDAO, MKR.

This move is likely to bring more attention to MakerDAO's ecosystem, which includes an on-chain credit protocol and the DAI stablecoin. Grayscale's decision is also an indication of the growing interest in decentralized finance (DeFi) assets among institutional investors.

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