The community decided to add WBTC to bring greater liquidity to the protocol. Although it is shown as an option to bring Bitcoin to the Ethereum network, it is not really like that.
In recent days, the MakerDAO community approved the inclusion of WBTC, an ERC-20 token, as the fourth collateral asset on its platform. This decision will allow the protocol users to generate DAI with a Bitcoin-pegged crypto asset on the Ethereum network.
Through an announcement on its official blog, MakerDAO reported that choosing WBTC will bring greater liquidity to decentralized finance (DeFi) ecosystems and decentralized exchanges (DEX).
With the addition of WBTC, Bitcoin holders can now convert their BTC to WBTC, that is, bring Bitcoin to the Ethereum blockchain and then use it to generate DAI. The flexibility of the Maker protocol means that almost any type of tokenizable asset can be added as a guarantee in the system. The condition is that it has the appropriate risk parameters and the Maker governance approves it.
At this point, it is important to make clear that the community’s decision is not taking Bitcoin to the Ethereum network. The objective of the announcement would be related to an advertising strategy to promote the use of DAI, rather than to a new integration through a token that only serves as a price marker.
In this way, the stated intention to bring more liquidity to the protocol is an indirectly admitted intention to sell the final product, as is the case of the stablecoin DAI. All this occurs a few days before the next Bitcoin halving, a significant event within the cryptocurrency community that is receiving attention from international media.
Saying that Bitcoin is coming to Ethereum through an ERC-20 token to buy DAI is somehow misleading. MakerDAO’s blog is selling the idea that enthusiasts can now generate DAI with Bitcoin. However, this is not completely true and could cause more confusion. These factors could have the opposite effect rather than encourage greater adoption.
Cryptocurrency custody company BitGo and decentralized exchanges Kyber Network and Republic Protocol are behind the ERC-20 token WBTC, a fact that users also questioned.
On social networks, there were discussions about the possibility that the generation of DAI would become centralized, which would go against the nature of the protocol. In that sense, user @DegenSpartan posted a comment in his Twitter account:
From now on, around 10% of $DAI comes from $USDC as a collateral asset. Under current parameters, 21% of DAI may be backed by assets that depend on individual entities, such as Circle (USDC) or BitGo (WBTC). What happens when it is 30%, 50%, or 90%? At what point does DAI go from being decentralized to being centralized?
MakerDAO’s decision comes less than two months after the community approved the inclusion of the stablecoin USDC as collateral support in the platform’s operations. Consequently, four collateral assets are now included in the protocol, also taking into account the cryptocurrencies ETH and BAT.
By Alexander Salazar