Yesterday, BitGo's official blog showed that BitGo and BiT Global are creating a joint venture to diversify WBTC's custody and cold storage businesses across multiple jurisdictions, and BitGo will become a minority shareholder in the new joint venture. It is reported that BiT Global is a regulated trust and corporate service provider (TCSP) headquartered in Hong Kong, with a strategic partnership with Justin Sun and the Tron ecosystem.
As soon as the news came out, users speculated that Justin Sun might have significant influence or control in the joint venture that manages WBTC. This matter has a significant impact on the DeFi market, and the market is worried that the transfer of control of WBTC to him will bring unpredictable risks.
Jupiter co-founder meow published a "Letter to New and Old Custodians of WBTC" on social media, stating that Bitcoin held by WBTC should not be used for other purposes and hoped that BitGo could clarify the community's doubts.
Subsequently, MakerDAO, the largest acceptor of WBTC , plans to initiate a proposal to reduce the size of WBTC collateral to deal with potential risks of changes in custody rights.
On the same day, Justin Sun responded on the X platform, saying that "I personally participated in WBTC for strategic reasons and do not control the WBTC reserve private key." But this did not seem to dispel people's doubts.
Today, BitGo CEO Mike Belshe downplayed Justin Sun's involvement in the joint venture and emphasized BitGo's long-term commitment to security. Belshe said: "BiT Global has a dedicated team managing multiple customer accounts, and they have a responsibility to ensure safekeeping. They can't lend the funds out, can't give the funds to Justin Sun, me or anyone else at will, otherwise they will violate the law and face the risk of going to jail." He also said: "In terms of audits, we have always had wbtc.network, which will continue to operate."
BlockBeats has compiled the opinions and analysis of on-chain data analysts and some crypto KOLs on this incident for readers' reference:
Aunt Ai (On-chain data analyst)
There have been a lot of discussions today about "changes in WBTC custody rights" - MakerDAO's new proposal considers closing new WBTC lending and reducing Spark's WBTC lending ratio to 0; Sun Ge came out to clarify, and Jupiter Lianchuang also published an article expressing doubts.
This tweet will sort out the relevant data of $WBTC to help everyone better understand how important this familiar but somewhat unfamiliar asset is to the current crypto ecosystem.
1/ The Origin of WBTC
WBTC (Wrapped Bitcoin) is an ER20 token issued on the Ethereum network, whose value is pegged to Bitcoin at a one-to-one ratio; each WBTC has a corresponding Bitcoin as a reserve, which is managed by a custodian (currently Bitgo) to ensure that WBTC holders can redeem it for Bitcoin at any time.
WBTC was first proposed in 2017, and the white paper was officially released and put into use in 2019. By 2020, the scale of locked BTC had exceeded US$2.1 billion, making it a well-deserved "bridge between Bitcoin and Ethereum."
2/ WBTC data
Currently, WBTC supports Ethereum/Base/Kave/Osmosis/Tron networks, of which Ethereum mainnet minting accounts for as high as 99.8%. As of today, 154,726 WBTC (worth US$9.45 billion) have been minted, accounting for 0.78% of the total market value of Bitcoin.
Data from the Dune panel "WBTC: Supply Dynamics" shows that currently more than 41% of WBTC is used in the lending ecosystem, of which MakerDAO is the largest usage scenario (acceptor), and nearly 32% is used for direct transactions.
Data panel: https://dune.com/21co/wbtc
3/ WBTC proofreading information
The impact on the security and actual use of WBTC is currently unclear. If you want to learn more about WBTC partners/specific transactions for minting and destruction/BTC custody addresses, etc., you can go to https://wbtc.network/dashboard to find relevant information. The official has disclosed it very completely.
Feedback from some overseas users shows that WBTC is of great significance to the entire DeFi system:
Liu Feng (Founder of BODL Fund)
The launch of WBTC is one of the most important landmark events in the gestation period before the Ethereum DeFi ecosystem burst into huge vitality.
That was the coldest time in the market in the second half of 2018. BitGo jointly launched WBTC with the DeFi protocol, which was still in its infancy but had begun to show vitality. It introduced BTC assets into the Ethereum ecosystem in a relatively centralized way that had a good reputation among all participants.
Now the situation has changed drastically.
Simply put, BitGo brought WBTC into Justin Sun's home: the precious bitcoins that need to be locked up to mint WBTC will have an additional custodial service provider in the future - a company called BiT Global from Hong Kong.
The point is: BiT Global is a joint venture between BitGo and Justin Sun. The question is, is BiT Global reliable?
BigGo announced that BiT Global is a "TCSP (Trust or Corporate Service Provider)" licensed company in Hong Kong, which looks quite impressive... But is the TCSP license valuable?... Anyway, the data I saw is: this license was launched in 2018, and as of September 2020, more than 7,300 licenses have been issued...
You can taste it for yourself.
By the way, the information I saw was that BiT Global was registered on August 9, 2023. There was also an important news that month: BitGo was previously unable to produce audit reports on time, and Galaxy Digital cancelled the acquisition agreement. It failed to win the lawsuit, so it had to suspend its acquisition of Prime Trust, lay off employees, reduce costs, and find money to save itself. Finally, in August 23, it announced that it had raised $100 million.
When BitGo announced this round of financing in August 2023, it was coy about not disclosing who the investors were in this round. Later, it was reported that some of the new investors were from Asia. Now it seems that Sun Ge may have already had his hands on BitGo at that time. This is just speculation. BitGo is a centralized custodian, and WBTC is a centralized synthetic asset. I think BitGo has a responsibility to make these arrangements clear, otherwise...
Waterdrop Capital CEO Dashan also expressed his views in the comment section:
Insight Finance
Bitcoin fell, and WBTC caused a huge shock.
Cause of the incident: BitGOB announced plans to transfer control of the WBTC product to a joint venture with BiT Global. BitGlobal is a company controlled by Justin Sun, and the market is preparing to sell WBTC out of distrust of Justin Sun.
MakerDao released a proposal to sell off:
The community of the DeFi project MakerDAO launched a proposal to clear the WBTC in Maker's collateral warehouse. The proposal caused a huge shock in the industry. After all, Maker is the largest collateral lending protocol in the industry, and currently manages nearly 5 billion US dollars of various digital assets on the chain. WBTC is the largest BTC cross-chain asset on the Ethereum chain, currently managing more than 150,000 BTC with a total value of nearly 10 billion US dollars.
WBTC may put a large number of Defi projects and L2 projects at risk: Currently, many Defi projects will choose WBTC to flow in from Ethereum. Once WBTC anchors, most projects will be implicated. Just like a cluster bomb surge.
Welcome to BlockBeats the BlockBeats official community:
Telegram subscription group: https://t.me/theblockbeats
Telegram group: https://t.me/BlockBeats_App
Official Twitter account: https://twitter.com/BlockBeatsAsia
