The decentralized finance (DeFi) platform Sky, formerly known as MakerDAO, has approved a proposal to offload its exposure to wrapped Bitcoin (WBTC). This decision follows concerns raised by advisors regarding the potential risks associated with WBTC.

A governance vote conducted within the Sky community overwhelmingly supported the proposal to remove WBTC from the platform’s collateral. The proposal garnered 88.17% approval, with 95,826 MKR tokens pledged in support.

Sky will implement a multi-phase process to offload WBTC from its system. The first phase is scheduled to begin on October 3rd, with the final phase concluding on November 28th.

BA Labs, an advisor to Sky, raised concerns about the recent changes in WBTC ownership and control. The team expressed concerns about the potential counterparty risks associated with entities affiliated with Justin Sun, the founder of Tron.

Sky is exploring alternative wrapped Bitcoin options, such as Coinbase’s cbBTC and Threshold’s tBTC. These alternatives may offer greater transparency and security compared to WBTC.

Another DeFi platform, Aave, has also expressed concerns regarding WBTC. The Aave community is considering a proposal to reduce the platform’s exposure to WBTC. Similar to Sky, Aave’s concerns are related to the potential risks associated with WBTC’s ownership and control.

The concerns surrounding WBTC have had an impact on the market. The market capitalization of wrapped Bitcoin on Ethereum has declined by almost 40% since its peak in November 2021.

The decision by Sky to offload its WBTC collateral reflects the growing concerns within the DeFi community about the potential risks associated with this particular wrapped Bitcoin variant. As the industry continues to evolve, it is likely that other DeFi platforms will also reassess their exposure to WBTC and explore alternative options.

Decentralized finance pioneer Sky, formerly Maker, is forging ahead with a plan to offload wrapped Bitcoin collateral from the platform.

Following a governance vote that ran for three days and closed on Sept. 19, the DeFi lending and borrowing platform has ratified to remove its exposure to wrapped Bitcoin (WBTC).

The vote garnered overwhelming support from the Sky community with the proposal passing with 88.17% in approval pledging 95,826 MKR.

Additionally, 11.83% abstained from voting and there were no votes against it, however, only 13 MKR whales participated in the vote. 

Sky governance poll results. Source: MakerDAO

Sky will now proceed with offloading WBTC in multiple phases, with the first commencing on Oct. 3 and the final phase on Nov. 28.

Sky’s decentralized non-custodial liquidity protocol, SparkLend, currently has $61.38 million in WBTC-backed collateralized debts. 

BA Labs, an advisor to the DeFi protocol, raised concerns over WBTC in August. On Sept. 12, the team initiated a proposal stating that it was planning to offboard WBTC variants from SparkLend and Legacy Vaults. 

At the time, the team cited concerns over “recent changes in WBTC ownership and control, likely involving Justin Sun or affiliates,” adding that this poses “significant counterparty risks based on past track records with other Sun-affiliated products.”

The custodian holding the Bitcoin backing WBTC, BitGo, partnered with Tron founder Justin Sun-affiliated BitGlobal in August, sparking the concerns. 

While lambasting Coinbase’s recently launched cbBTC wrapped Bitcoin variant, Justin Sun defended WBTC stating “WBTC, USDT, and Tron have nothing to do with any Chinese regulations,” on Sept. 13.

Meanwhile, Sky is considering alternative forms of wrapped Bitcoin for collateral including Coinbase’s cbBTC and Threshold’s tBTC, according to a proposal earlier in September.

Sky is not the only DeFi platform looking to distance itself from WBTC. On Sept. 18, a request for comment was posted on the Aave governance forum to reduce wrapped Bitcoin exposure. 

The same concerns over BitGo were given: 

“Although we continue to be in communication with BitGo to establish clarity about BIT Global’s compliant status, we remain unconvinced about the outlook for this partnership and its implications for WBTC transparency standards and user assurances going forward.”

In a post on X on Sept. 19, Aave founder Stani Kulechov clarified that “Aave is not offboarding wBTC, this is a proposal from one of the risk providers to cap wBTC.” 

Source: Stani Kulechov

Aave has around $990 million in debt exposure to WBTC, according to ChaosLabs, which raised concerns in August. 

There are currently around 152,942 wrapped Bitcoin on Ethereum with a market cap of around $9.6 billion, according to the order book, down almost 40% from its peak of $15.8 billion in November 2021.

Magazine: Proposed change could save Ethereum from L2 ‘roadmap to hell’

According to Odaily, Whale Alert has reported that approximately 4,094 MKR tokens were destroyed today at around 21:46 UTC+8 in an unknown Ethereum wallet. The value of the destroyed tokens is estimated to be around $5,935,604.

Coinspeaker Why Aave Outperforms other DeFi Blue Chips Like Maker and Lido

The DeFi lending protocol Aave AAVE $141.3 24h volatility: -4.3% Market cap: $2.11 B Vol. 24h: $392.28 M outperformed its sector peers in Q3. Since mid-June,  AAVE’s value has hiked 71% and traded above $140. On the contrary, its rivals were in the red. Maker MKR $1 520 24h volatility: -4.9% Market cap: $1.42 B Vol. 24h: $64.87 M , which rebranded to Sky, declined 31%, while Uniswap UNI $6.39 24h volatility: -6.4% Market cap: $4.82 B Vol. 24h: $123.68 M dropped 38% over the same period. The staking platform, Lido LDO $0.98 24h volatility: -4.5% Market cap: $877.02 M Vol. 24h: $79.25 M , was the worst sector performer, with a whopping 50% decline in Q3.

Photo: TradingView

The trio – MKR, LDO, and UNI, mirrored Ethereum’s ETH broader decline. ETH, considered DeFi’s health barometer, was also down 35% over the same period. In short, based on quarterly returns, investors holding the other top DeFi blue chips were in losses – but not AAVE. So, what’s driving AAVE’s lead and decoupling from ETH’s decline?

What Makes AAVE an Outlier?

According to Kinji Steimetz, an enterprise research analyst at crypto research firm Messari, AAVE’s rally was boosted by macro and crypto-specific factors. Steimerz noted that the declining interest rates in TradFi would make DeFi rates more appealing.

Another crypto-centric catalyst was the potential fee switch announced in July. Pundits have viewed the proposal to adjust protocol fees as a growth catalyst that could benefit AAVE’s value and its holders.

In fact, the fee proposal update exploded AAVE network activity, as seen by a surge in daily active addresses.

Photo: Artemis

Additionally, some top figures, like Ethereum’s founder Vitalik Buterin, recently used the protocol, and Donald Trump plans to partner with it for its new DeFi projects. Collectively, this reinforced confidence in AAVE and fueled wild interest, as seen by the spike in social mindshare by Kaiko data.

Photo: Kaiko

Finally, Steimtz pointed to limited supply pressure as AAVE, as most of its token supply was almost fully unlocked.

“With the token supply (almost) fully unlocked, you can enter a position without worrying about supply overhang,” Steimtz wrote.

According to Token Unlocks data, 92% of AAVE tokens, or about 14.67 million coins, have been unlocked. The total supply was designed to be 16 million tokens, meaning only 1.33 million, or about 8%, was left to be unlocked.

Photo: TradingView

AAVE was above $140 on the price charts and hovered near its March high of $153. This meant it was one of the top tokens to return to its March highs despite the Q3 and Q2 drawdowns. Given the RSI readings of 56, more rally for AAVE was possible because overbought conditions were yet to be hit.

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Why Aave Outperforms other DeFi Blue Chips Like Maker and Lido

MakerDAO (MKR), formerly known as Sky, is set to vote on a governance proposal to fully ‘offboard’ wrapped Bitcoin (WBTC) from its ecosystem. The proposal was put forward by DeFi risk management firm B.Labs, which cited centralization concerns stemming from Tron (TRX) founder Justin Sun’s involvement in the project. The proposal outlines a five-step process to offload WBTC, starting on Jan. 26. MakerDAO’s native lending facility, Sparklend, currently has $73 million in WBTC-collateralized loans, while Maker Vaults hold $127 million in WBTC debt. If approved, the proposal would see WBTC gradually replaced by other decentralized Bitcoin (BTC) tokens such as renBTC and sBTC. The move is seen as a step towards reducing MakerDAO’s exposure to centralized entities and increasing the decentralization of its ecosystem.

MakerDAO has long been a cornerstone of decentralized finance (DeFi), thanks to its stablecoin DAI and the governance token MKR. With a proven track record of enabling decentralized lending and borrowing, Maker continues to play a crucial role in the evolving DeFi landscape. But could Maker surpass expectations in 2025 and become an even bigger player? Here's why the project might be poised for significant growth over the next few years.
Strong Fundamentals and Long-Term Stability
Maker's appeal lies in its ability to issue DAI, a decentralized stablecoin pegged to the US dollar, through a system of collateralized debt positions (CDPs). Unlike centralized stablecoins like USDT and USDC, DAI is backed by a variety of cryptocurrencies, making it more resistant to single points of failure. This decentralization and security make Maker an attractive option for users who value trustless systems in DeFi.
As demand for decentralized stablecoins grows, DAI could see increased adoption across a broader range of DeFi protocols, leading to further demand for MKR as a governance token. Maker's system has already withstood market volatility, making it a reliable platform that could continue to thrive as DeFi becomes more mainstream in 2025.
Expanding Collateral Options and Flexibility
One of MakerDAO's key strengths is its ability to accept a wide range of assets as collateral to mint DAI. Initially, Maker only accepted ETH, but the platform has since expanded its collateral options to include assets like WBTC, USDC, UNI, and other cryptocurrencies. This expansion increases Maker's flexibility, allowing users to access DAI through a broader range of assets, which could significantly enhance its appeal as DeFi grows.
Looking forward, Maker could further diversify its collateral offerings by adding support for emerging cryptocurrencies or even tokenized real-world assets. As the world of DeFi integrates more with traditional finance, the potential for Maker to incorporate new forms of collateral opens the door for massive growth in the coming years.
Ecosystem Growth and Integration
As DeFi protocols become increasingly interconnected, Maker's position as a backbone of decentralized lending and stablecoin issuance strengthens. Maker has already integrated with many top DeFi platforms, enabling users to access DAI and other services across the ecosystem.
In 2025, we could see further integration of Maker with newer DeFi projects, gaming platforms, and decentralized autonomous organizations (DAOs). This would deepen the use of DAI as the stablecoin of choice for a broader range of applications, increasing the overall demand for the Maker platform. As more decentralized applications (dApps) adopt Maker, its utility and importance will only continue to grow.
MKR Token Utility and Burn Mechanism
The MKR token plays a critical role in the Maker ecosystem, not just as a governance token but also as a tool for managing risk. MKR holders vote on important governance decisions, such as protocol upgrades and changes to the types of assets accepted as collateral. This decentralized governance gives the community control over Maker’s future direction.
One of the standout features of MKR is its burn mechanism, which reduces the total supply of MKR over time. Whenever the protocol generates fees from users opening CDPs or borrowing DAI, a portion of these fees is used to buy back and burn MKR tokens. This deflationary model reduces the overall supply of MKR, creating potential price appreciation as demand increases.
If the usage of DAI continues to grow, especially in the context of increased DeFi adoption and market maturity, the burn rate could accelerate, driving further demand for MKR and pushing its price upward. This creates a compounding effect, where increased demand for DAI indirectly boosts MKR’s value through token burns.
Navigating Regulatory Challenges
While MakerDAO has strong technical fundamentals, it’s also poised to navigate the regulatory landscape, a key factor for long-term success. As governments worldwide begin to regulate stablecoins and DeFi protocols, Maker’s decentralized nature provides a clear advantage over centralized alternatives. Unlike centralized stablecoins, which can face shutdowns or regulatory hurdles, DAI is generated through decentralized smart contracts, reducing its vulnerability to sudden regulatory shifts.
MakerDAO’s decentralized governance model ensures that it can adapt quickly to regulatory changes, keeping the protocol compliant with evolving laws without relying on centralized decision-making. This adaptability could position Maker as a leading player in the increasingly regulated DeFi space.
Conclusion
MakerDAO is positioned as a stable, trusted player in the DeFi space with a proven track record of resilience. Its decentralized governance, diverse collateral options, and ability to withstand market fluctuations set it apart from other projects. As DeFi continues to expand and integrate with traditional finance, Maker’s ecosystem could grow exponentially by 2025, making it a strong contender to outperform expectations.
With the MKR burn mechanism reducing token supply, the demand for MKR could rise significantly, leading to potential price growth. Add to that the expanding collateral options and growing integration across DeFi, and Maker seems well-prepared for a future of success.
💬 Are you a holder of MKR or DAI? What are your thoughts on Maker’s long-term potential? Share your strategies and insights in the comments below!
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#MakerDAO #MKR #DAI #DeFi #Binance

An early MKR holder, identified by wallet address “0x07a,” has sold 251.53 MKR tokens for 172.461 ETH, valued at around $408K, at a price of $1,624 per token.

This long-time investor originally accumulated 451.529 MKR tokens during the token’s early days, between January 20 and March 2, 2017, when the price was a mere $23.

The tokens were purchased through the wallet address “0x28E632F8838dcc6C558856d7FC1115143c3e8585” and then transferred across several wallets before eventually resting in the current wallet, “0x07a.”

On October 11, 2020, the investor migrated their MKR holdings to the new version of the tokens and continued to hold all of them in the same wallet until the recent sale.

🚨 A super early $MKR holder has sold after over 7 years!

– This holder bought 451.5 old $MKR in 2017 when the price was ~$23 (the inception of $MKR).– This holder just sold 251.5 $MKR ($408K) for 172.5 $ETH ~5 hours ago at $1,624 (x70).#MakerDAO is down 24% since the rebrand… pic.twitter.com/y3sp8nc8US

— Spot On Chain (@spotonchain) September 6, 2024

MKR Early Adopter Still Holds Position 

As of now, the early adopter still holds 200 MKR tokens, worth approximately $326K.

This sale comes shortly after MakerDAO, a key player in the decentralized finance (DeFi) space, announced its rebranding to Sky. Since the rebranding in late August, the MKR token has seen a 24% decline in value, largely influenced by overall market conditions and criticism surrounding the platform’s newly introduced “freeze function.”

This drop in MKR’s price has stirred concerns within the community, particularly as the rebranding and added functionalities have not yet stabilized the token’s performance. With this early investor selling off a portion of their holdings, all eyes are on how MKR and the broader MakerDAO ecosystem will fare in the near future.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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