Sky reassesses WBTC plan amid BitGo discussion and new vote

Sky (CRYPTO:SKY), a decentralised finance (DeFi) pioneer, has reconsidered its earlier plan to offboard Wrapped Bitcoin (CRYPTO:WBTC) as collateral for its lending protocol following a conversation with BitGo co-founder Mike Belshe.

Initially, Sky, formerly known as Maker, had planned to offboard WBTC due to concerns about its custody after BitGo partnered with Tron founder Justin Sun’s BitGlobal.

This partnership had raised concerns within the Sky community, leading to a governance vote on September 19, where 88% of voters supported removing WBTC from collateral.

However, BA Labs, a key advisor to Sky, now recommends pausing the offboarding process.

On September 24, following a discussion on Sky’s governance forum, BitGo clarified several aspects regarding the custody and management of WBTC.

Belshe emphasised BitGo’s commitment to providing 60 days' notice before any changes to entities controlling WBTC signing keys, a practice BitGo created and has consistently followed.

BA Labs representative and DAO delegate “monet-supply” acknowledged that although concerns about BitGlobal’s involvement remain, the current exposure to WBTC has fallen to a “more acceptable range.”

At present, total borrowing against WBTC collateral has decreased to $170 million, with Sky’s SparkLend protocol’s exposure reduced to $61 million.

While BA Labs still harbors concerns about BitGlobal’s role, it no longer considers the risk level critical enough to warrant immediate offboarding.

A new recommendation to indefinitely pause the collateral offboarding will be put to an executive vote on October 3.

Belshe also raised concerns over the platform's favoring of Coinbase’s centralised cbBTC (CRYPTO:CBBTC) over WBTC, questioning the added risk of using cbBTC without proof-of-reserves (POR) commitments.

At the time of writing, the Sky (SKY) price was $0.06659.