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Home»HACKING NEWS»Threshold Community Proposes Merger to Protect WBTC Amid Growing Concerns
HACKING NEWS

Threshold Community Proposes Merger to Protect WBTC Amid Growing Concerns

By Crypto FlexsSeptember 4, 20242 Mins Read
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Threshold Community Proposes Merger to Protect WBTC Amid Growing Concerns
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  • The Threshold community has proposed merging tBTC and WBTC.
  • This proposal stemmed from concerns about the stability of WBTC due to Justin Sun’s involvement.
  • According to the proposal, BitGo will receive T tokens and become a key stakeholder in the Threshold Network.

As part of a strategic move to secure the future of Wrapped Bitcoin (WBTC), a proposal has been put forward to merge Threshold’s decentralized tBTC token with BitGo’s WBTC, titled “#saveWBTC – Merge with Threshold’s tBTC.”

The proposal, currently being discussed on the Threshold forum page, comes as concerns grow within the cryptocurrency community about the stability of WBTC following BitGo’s partnership with BiT Global, a Hong Kong-based company partly owned by Tron ecosystem founder Justin Sun.

Concerns about Justin Sun’s participation in WBTC

This partnership has raised alarms due to Sun’s controversial past collateral embezzlement incidents. These anxieties have already led major DeFi protocols like MakerDAO to limit their exposure to WBTC, suspend its use as collateral, and consider offboarding the asset entirely.

Aave, another major player in the DeFi space, is also watching the situation closely.

Threshold and WBTC merge proposal

The merger proposal seeks to replace WBTC’s centralized custody and merchant-based minting and burning model with a decentralized, permissionless minting/redemption mechanism. This transition aims to ensure the safety and stability of the underlying collateral and provide peace of mind to users and protocols that rely on WBTC.

The plan involves granting Threshold’s DAO merchant rights for WBTC, while also disabling tBTC minting, allowing existing tBTC holders to redeem WBTC at a 1:1 ratio.

As part of this proposal, BitGo will be granted T tokens, making BitGo the largest stakeholder in the Threshold Network.

To ensure a smooth transition, the merger will be implemented in phases, and a fallback plan will be put in place to safely separate WBTC if the proposal is rejected.

Threshold aims to combine WBTC’s established user base and liquidity with tBTC’s decentralized technology to preserve WBTC’s role in the DeFi ecosystem and ensure that concerns about BiT Global’s participation do not destabilize the overall market.


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