- MakerDAO is concerned about the partnership between BitGo and BiT Global
- WBTC debt limit has been lowered to zero DAIs, and LTV is now set at 0%
MakerDAO is completely suspending WBTC loans, due to concerns about BitGo and its upcoming partnership with BiT Global.
MakerDAO Absolute Decision Regarding WBTC Loans
We recently mentioned the announcement of BitGo and BiT Global’s partnership in the context of the pending release of cbBTC.
The story has a side effect on a player who has taken action on the matter, namely MakerDAO.
The company approved a plan in which the WBTC debt limit was lowered to zero DAI, while The collateralization ratio (LTV) is now set at 0% for WBTC, making new WBTC-backed loans unavailable.
However, an important point remains that this decision does not affect existing WBTC-backed loans, as the liquidation threshold for these loans stays the same.
MakerDAO’s Reasons for Such Decision
The recent announcement of BitGo’s partnership with BiT Global, and the transfer of asset management distributed across jurisdictions including Hong Kong and Singapore – has raised security concerns.
This has led MakerDAO to diversify the risks associated with asset centralization, which is completely out of step with MakerDAO’s strategy and the criteria of its underlying asset DAI.
Conclusion
MakerDAO’s proactive action to defend its position is noteworthy.
It may show that MakerDAO is indeed not backing down from its strategy and is avoiding its core risks, even if things are not entirely obvious and consequences may yet be in store.
Also, it may signal to us that things will start to happen one by one, and the stablecoin market could expect impressive shifts shortly.
