tl;dr
LlamaRisk, Aave's risk service provider, has proposed reducing the loan-to-value (LTV) ratio of BitGo's Wrapped Bitcoin (WBTC) to zero on the DeFi lending platform. This move is opposed by the Aave community, including Marc Zeller, founder of the Aave Chan Initiative (ACI), due to concerns about Bit...
Aave's Risk Service Provider Proposes Reduction of WBTC's LTV Ratio LlamaRisk, Aave's risk service provider, has proposed reducing the loan-to-value (LTV) ratio of BitGo's Wrapped Bitcoin (WBTC) to zero on the DeFi lending platform. This move is opposed by the Aave community, including Marc Zeller, founder of the Aave Chan Initiative (ACI), due to concerns about BitGo's custodial transition for WBTC and its partnership with BIT Global, involving Justin Sun. Despite LlamaRisk's recommendation, the Aave community, including Zeller, opposes the drastic reduction and suggests diversifying the platform with alternative Bitcoin products. Sky, formerly MakerDAO, has also approved a proposal to stop new borrowing against BitGo's WBTC. Despite this, WBTC remains the dominant tokenized version of Bitcoin in the DeFi space.
The proposal highlights concerns stemming from BitGo’s custodial transition for WBTC. In August, BitGo announced its plan to transfer control of WBTC to a joint venture with BIT Global, a partnership that includes Justin Sun, founder of the Tron blockchain. Sun’s involvement has raised transparency concerns. LlamaRisk explained that its analysis of projects linked to Justin Sun has revealed patterns of transparency issues in products with multi-billion-dollar market caps. Due to these concerns, the firm recommended reducing WBTC’s LTV ratio to zero. This would prevent further borrowing against WBTC collateral across Aave V3 on Ethereum, Arbitrum, Avalanche, Harmony, Optimism, and Polygon while protecting existing users’ positions. Additionally, LlamaRisk proposed lowering supply and borrowing caps, keeping them 5-10% higher than current utilization. This would limit WBTC exposure while maintaining user flexibility.
Despite these arguments, many in the Aave community oppose the drastic cut. Marc Zeller criticized the plan as too severe. He suggested introducing alternative Bitcoin products like cbBTC and tBTC to diversify the platform and reduce reliance on WBTC. However, he strongly opposed measures that could harm current WBTC users.
Notably, the Aave community isn’t alone in this debate. Sky, formerly MakerDAO, recently approved a proposal to stop new borrowing against BitGo’s WBTC. WBTC remains the dominant tokenized version of Bitcoin despite major DeFi players moving away from it. With a market capitalization exceeding $9 billion, WBTC is nearly 50 times larger than Coinbase’s new wrapped Bitcoin product cbBTC.
More about Albertsons Companies
Albertsons Companies, Inc. participates in the pharmacy and food operation in the United States.
Industry: TRADE & SERVICES, RETAIL-GROCERY STORES
Market Cap: 10.81B
PE Ratio: 9.72
EPS: 0.48
Beta: 1.92
Current Stock Price: $137.79
Dividend Yield: 0.0141
Revenue: 79.45B
Debt to Equity: 24.39
Return on Equity: -0.43
Price to Book: 0.009