Threshold Network has proposed to acquire BitGo’s Wrapped Bitcoin (WBTC) product, offering $36.4 million worth of native T tokens.
The move is aimed at transitioning WBTC from a centralized to Threshold’s decentralized model and integrating it with the tBTC Bitcoin (BTC) bridge.
The proposal, put forward by NuCypher co-founder and Threshold contributor MacLane Wilkison, involves issuing additional T tokens equivalent to 15% of the current fully diluted supply as a subsidy to BitGo.
This makes BitGo the largest stakeholder in the Threshold Network while maintaining the decentralized nature of the bridge.
Additionally, the proposed acquisition would combine WBTC’s $9 billion market cap and widespread adoption with tBTC’s permissionless bridging mechanism, an approach Wilkinson argues would better achieve BitGo’s goal of multi-jurisdictional and multi-institutional custody.
If approved, the merger would be implemented in stages: Threshold would acquire the rights to sell WBTC, the existing WBTC supply would be gradually migrated to decentralized management, and deposits would be spread across multiple wallets to ensure security.
If BitGo declines, Wilkison argued, the DeFi ecosystem “needs the safe and orderly offboarding of WBTC.”
In this case, the additional minting of T-tokens could be used to subsidize the costs of offboarding WBTC from the ecosystem and migrating it to alternatives such as tBTC or cbBTC.
Dealing with controversy
Notably, the proposal comes after BitGo recently announced that it will adopt a multi-jurisdictional custody model to accelerate its global expansion plans, by transferring custody of WBTC to a joint venture with BiT Global.
The move sparked concern in the crypto community due to the involvement of TRON founder Justin Sun, especially with the removal of 12,000 BTC from backing USDD, the stablecoin associated with the Tron ecosystem.
Despite BitGo CEO Mike Belshe assuring the market that Sun would not be able to move the funds, major DeFi protocols including MakerDAO and Aave have already taken steps to limit their exposure to WBTC.
Threshold’s proposal aims to address these concerns and ensure the continued stability of WBTC in the crypto ecosystem.
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