Parsec Weekly #85
The flavours of wrapped BTC
The flavours of wrapped BTC
On the 9th of August, BitGo announced their plans to transfer control of wBTC to a joint venture with BitGlobal (which Tron founder, Justin Sun, is allegedly deeply involved with).
The reasoning behind the plan was to diversify custody operations and cold storage across multiple jurisdictions.
Despite the news appearing relatively mundane on the surface, the connection to Justin Sun sent ripples with a MakerDAO forum post surfacing the next day highlighting the added risk to wBTC with Justin Sun’s involvement. They cite a deterioration in the operational processes and transparency in TUSD following Justin Sun taking control; resignation of the previous management team, suspension of real time proof of reserves, and several significant depegs caused by interruptions in the redemption service. They also cite even more concerning examples where Sun affiliated projects may have misappropriated backing.
With these factors considered, MakerDAO proposed to offboard the entirety of wBTC collateral from Maker and Spark, which passed through governance shortly after.
Naturally, amid the drama surrounding wBTC, other competitors are coming to the fore - trying to leverage the attention to penetrate mindshare:
Despite the marketing push, wBTC supply is hardly cratering, contracting by just 2000 BTC (~$122m). While this sounds like a lot, given the immense size of wBTC, supply is only down less than 2% since the news broke.
Competitor wrapped BTC products are gaining market cap (tBTC added roughly $20m in supply) but they are hardly playing in the same ball park...
Current supply measured in BTC:
wBTC supply: 153,372
tBTC supply: 3,399
renBTC: 304 (renBTC somehow still has some funds under custody despite being wound down back in 2022 due to their connection with Alameda Research)
sBTC supply: 200
While there is certainly a shake-up afoot, it doesn’t seem as though wBTC holders are rushing to the door quite yet. It will be interesting to see how cbBTC shakes up the game when they launch. Integrations with Big DeFi will undoubtedly be key in growing market share.