Threshold Network proposes acquisition of BitGos WBTC to address centralization worries
Threshold Network has proposed to acquire BitGos Wrapped Bitcoin (WBTC) product, offering $36.4 million worth of their native T tokens.
The move aims to transition WBTC from centralized custody to Thresholds decentralized model, merging it with their tBTC Bitcoin (BTC) bridge.
The proposal was presented by NuCyphers co-founder and Threshold contributor MacLane Wilkison and involves minting additional T tokens, equivalent to 15% of its current fully diluted supply, as a grant to BitGo.
This would make BitGo the largest stakeholder in the Threshold Network while maintaining the bridges decentralized nature.
Moreover, the proposed acquisition would combine WBTCs $9 billion market cap and widespread adoption with tBTCs permissionless bridging mechanism. Wilkinson argues this approach better achieves BitGos goal of multi-jurisdictional and multi-institutional custody.
If accepted, the merger would be implemented in stages. Threshold would gain merchant privileges for WBTC and gradually transfer the existing WBTC supply to decentralized custody, with deposits spread across multiple wallets to ensure security.
Should BitGo decline, Wilkison claims that the DeFi ecosystem will require a safe and orderly offboarding of WBTC.
In this case, the additional minting of the T token could be used to subsidize the costs of offboarding WBTC from the ecosystem and migration to alternatives like tBTC and cbBTC.
Addressing the controversy
Notably, the proposal comes following BitGos recent announcement that it would adopt a multi-jurisdictional custody model to accelerate its global expansion plan. This would be achieved by transferring WBTCs control to a joint venture with BiT Global.
This movement raised concerns in the crypto community due to TRON founder Justin Suns involvement, especially after 12,000 BTC were removed from USDDs backing. USDD is the stablecoin tied to the Tron ecosystem.
Despite BitGos CEO Mike Belshe assuring the market that Sun would not be able to move funds, major DeFi protocols, including MakerDAO and Aave, have already taken steps to limit their exposure to WBTC.
Thresholds proposal aims to address these concerns and ensure the continued stability of WBTC in the crypto ecosystem.
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Text source: CryptoSlate
