According to an article published on the governance forum on Thursday, the lending protocol Sky (formerly MakerDAO) will vote to completely abandon Wrapped Bitcoin (WBTC) from its ecosystem. Due to the impact of this proposal on a $200 million loan secured by WBTC on the platform, it could become a significant development in the DeFi (decentralized finance) field.

WBTC is a Wrapped Token supported 1:1 by Bitcoin (BTC), allowing investors to use Bitcoin on other memory blockchains. This token plays an important role as collateral in the DeFi lending field, with a market value of approximately $9 billion.

According to previous reports from Zombie, cryptocurrency custodian BitGo announced last month that it would tran**er its WBTC business to a multi jurisdictional joint venture with Hong Kong based custodian BiT Global, forming a "strategic partnership" between BitGo, Tron's blockchain ecosystem, and Tron founder Sun Yuchen. This news has raised concerns among some cryptocurrency market participants, who believe it may pose challenges to the DeFi ecosystem.

Due to concerns about the relationship between Sun Yuchen and the underlying asset custodian of WBTC, BA Labs, an influential DeFi risk management company in Sky protocol governance, has suggested reducing its exposure to WBTC. On Thursday, BA Labs proposed to gradually remove all WBTC exposed positions from collateral assets in five steps, with the first step starting from September 26th and each step being voted on.

BA Labs stated in the proposal that "we have found that legal due diligence cannot provide sufficient assurance" and suggested that if the proposal is approved, alternative products should be introduced on the platform.

According to an article released by BA Labs, there are currently approximately $73 million worth of loans secured by wBTC on SparkLend, a lending platform affiliated with Sky, and $127 million worth of WBTC related debt in Sky's Legacy Vaults. Sky suggests that Legacy Vaults and SparkLend's WBTC users close their WBTC positions.

The controversy surrounding WBTC has made competitors offering alternatives more active, including dlcBTC, Threshold's tBTC, and FBTC supported by the two-layer network Mantle. It is worth noting that the US cryptocurrency exchange Coinbase announced yesterday the launch of its own packaged Bitcoin cbBTC.