Sky CEO in talks with BitGo CEO considering alternative plans for offboarding WBTC

Decentralized finance (DeFi) pioneer Sky, formerly Maker, is reconsidering its plan to offboard Wrapped Bitcoin (
WBTC
) as collateral for its lending protocol after receiving a new recommendation from one of its key advisers, BA Labs.
On Sept. 24, BA Labs recommended pausing the WBTC offboarding plan following a lengthy
conversation
with BitGo co-founder Mike Belshe on Sky’s governance forum.
The move follows BitGo’s clarifications about changes in management or custody of WBTC, control of the signing keys, and commitment to give advance notice of changes.
BitGo committed to providing at least 60 days of public written notice before any future changes to entities controlling WBTC keys. Belshe emphasized that BitGo created this “60-day standard” and has always followed it.
BA Labs team member and DAO delegate “monet-supply” said with these commitments in mind and overall WBTC exposure falling to $170 million in total borrowing, the collateral risk is in a “more acceptable range.”
The new recommendations will be put up for an executive vote on Oct. 3.


SparkLend exposure to WBTC has fallen to $61 million. Source:
Spark Explorer
BitGo was the sole custodian of the Bitcoin backing WBTC until August, when it entered into a partnership with Tron founder Justin Sun’s BitGlobal to transfer custody,
sparking concerns
among the Sky community.
This led to a
governance vote
on Sept. 19 for a proposal to offboard WBTC collateral. The vote passed with 88% in favor of the platform removing its exposure to wrapped Bitcoin in a five-step process starting in early October.
Belshe’s responses indicated a level of frustration while emphasizing BitGo’s track record and commitments. He also questioned the logic of favoring Coinbase’s centralized cbBTC over WBTC:
Related:
DeFi lending protocol Sky to drop wrapped Bitcoin after governance vote
BA Labs also discussed the importance and limitations of proof of reserves for
WBTC
and suggested comparing risks between WBTC and Coinbase’s cbBTC.
Other specific parameter changes recommended included reducing liquidation penalties, adjusting liquidation ratios, and lowering the liquidation protocol fee for
Sky’s
Legacy Vaults and SparkLend.
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