The Threshold community proposed merging tBTC and WBTC. The proposal was born out of concerns about the stability of WBTC due to Justin Sun’s involvement. According to the proposal, BitGo would receive T tokens and become a major shareholder in the Threshold network.
In a strategic move to safeguard the future of Wrapped Bitcoin (WBTC), a proposal called “#saveWBTC – Threshold’s Merger with tBTC” has been submitted to merge Threshold’s decentralized tBTC token with BitGo’s WBTC.
The proposal, which is currently being discussed on Threshold's forum page, comes as concerns about WBTC's stability are growing within the crypto community following BitGo's partnership with Hong Kong-based BiT Global, a company part-owned by Tron ecosystem founder Justin Sun.
Concerns over Justin Sun’s involvement in WBTC
The partnership has raised concerns due to Sun's controversial track record, including past collateral misappropriation incidents, which have already led major DeFi protocols such as MakerDAO to limit their exposure to WBTC, stop using it as collateral, and consider offboarding the asset entirely.
Aave, another major player in the DeFi space, is also closely monitoring the situation.
The Threshold, WBTC Merger Proposal
The proposed merger seeks to replace WBTC's centralized custody and merchant-based mint-and-burn model with a decentralized, permissionless mint/redemption mechanism. This transition aims to ensure the safety and stability of the underlying collateral and reassure users and protocols that rely on WBTC.
The plan involves granting Threshold DAO merchants authority over WBTC, while disabling tBTC issuance and allowing existing tBTC holders to redeem WBTC at a 1:1 ratio.
As part of the proposal, BitGo will receive an endowment of T tokens, making it the largest stakeholder in the Threshold Network.
The merger will be carried out in stages to ensure a smooth transition, with a contingency plan in place to safely offboard WBTC if the proposal is rejected.
By combining WBTC's established user base and liquidity with tBTC's decentralized technology, Threshold aims to preserve WBTC's role in the DeFi ecosystem and ensure concerns over BiT Global's involvement do not destabilize the overall market.
