Sky Protocol Ends Wrapped Bitcoin Use to Focus on New Opportunities

Changes in the Sky Ecosystem

This decision is based on a governance proposal made by the issuer of the DAI stablecoin. The proposal indicated that WBTC-backed loans would be phased out within the Sky Ecosystem. This change is considered significant in the digital asset space due to Sky’s existing $200 million in WBTC-collateralized loans.

BA Labs’ Warnings

BA Labs, a risk management firm consulting for the Sky Ecosystem, has raised concerns about potential risks associated with Justin Sun’s involvement in the WBTC project. The firm recommended a complete phased-out approach to WBTC and emphasized that each step should require a vote. Additionally, BA Labs suggested incorporating alternative cryptocurrencies as collateral for Sky.

Sky has advised users to close their WBTC Legacy Vaults and SparkLend positions via social media platform X. The protocol confirmed it would no longer operate with wrapped Bitcoin and reiterated BA Labs’ suggestion to consider alternative cryptocurrencies as collateral.

Sky’s decision to cease WBTC usage is expected to have a significant impact on the digital asset ecosystem. The involvement of Justin Sun and BiT Global is becoming a key factor in Sky’s risk assessment. This development may encourage users to explore different cryptocurrencies and create new competitive dynamics within the sector, potentially accelerating changes in the crypto world and prompting a reevaluation of existing regulations.