Aaves bid to integrate Coinbases cbBTC sparks community concerns
Aave DAO has received a proposal to integrate Coinbases upcoming Bitcoin wrapper, cbBTC, into its V3 platform on the Ethereum mainnet and Base.
In a Sept. 10 post, Aaves founder, Stani Kulechov, explained that the proposal aimed to position Aave as the preferred platform for launching Tier-1 assets.
Proposal details
The proposal seeks to expand the options for Bitcoin holders participating in DeFi on Aave V3. By adding cbBTC, users would gain more choices for leveraging their Bitcoin, which could boost liquidity and engagement.
It noted that the integration of cbBTC aligns with Aaves strategy to offer high-quality assets. It allows users to access Coinbases liquidity while benefiting from Aaves established lending and borrowing features.
The proposal stated that the synergy between a major centralized exchange and a leading DeFi platform could attract mainstream users and drive the platforms growth.
In addition, the proposal also highlighted concerns surrounding Wrapped Bitcoin (WBTC) due to its association with TRON founder Justin Sun. It stated:
With the ongoing changes with WBTC it is pertinent to have alternative wrapped BTC tokens for use on Aave. With Coinbase as the issuer and custodian, their reputation will likely make this a trustworthy alternative to WBTC.
The proposal concluded that while cbBTC may take market share from WBTC, it provides a valuable alternative that could enhance BTC adoption on Aave.
Concerns raised
Meanwhile, an Aave user, Midapple, expressed concerns that the proposal to onboard cbBTC seems premature, given that the asset is not yet live.
The user highlighted several unanswered questions, including minting mechanisms, liquidity concerns, and proof of reserves.
Midapple also flagged potential regulatory risks, noting that Coinbase could face challenges that might affect cbBTC. Additionally, the user raised concerns about custodial risks, pointing out that if cbBTC relies heavily on Coinbase, it could pose a single point of failure.
They concluded:
It seems that the standard vetting process has been sidestepped entirely, and cbBTC is receiving special treatment that other assets have not been afforded. This sets a dangerous precedent and raises questions about the integrity of our decision-making process.
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Text source: CryptoSlate
