MakerDAO – the issuer of the decentralized stablecoin DAI – unanimously handed a proposal this week to take away renBTC as a type of reserve collateral.
The Bitcoin-pegged token was deemed too dangerous to carry publicity to in gentle of its connections to the now-bankrupt buying and selling desk Alameda Analysis.
Alameda and Ren
As announced by MakerDAO over Twitter on Thursday, Maker’s governance voted to offboard the RENBTC-A Vault kind in a governance poll that opened on Monday.
Practically 75,000 votes had been in favor of the movement, with 0 abstaining or objecting.
“Contemplating the acquisition of the Ren mission by Alameda Analysis and the current chapter of the latter, the Ren improvement crew disabled the Ren community mints,” stated Maker. Ren 1.0 community, it stated, will shut down inside 30 days after November 18th.
Ren is a bridge protocol for transferring digital belongings to different blockchains (ex. transferring BTC to Ethereum). Facilitating such bridges requires a trusted third occasion to carry natural BTC in reserves, such that the bridge token (renBTC) is all the time redeemable with BTC 1:1. This permits the value of the bridge token to persistently monitor that of the bottom asset.
Stablecoins work in a lot the identical means, with organizations like Tether and Circle holding billions in money and U.S. Treasuries to again their greenback equal tokens. Each organizations launch periodic attestations affirming the standing of their reserves.
Against this, MakerDAO backs its DAI stablecoin by way of a basket of cryptocurrencies like USDC, ETH, renBTC, and others.
Ren was acquired by Alameda Analysis earlier this yr and has since acquired quarterly funding from the agency. After the buying and selling desk filed for chapter, Ren announced final week that it will disable its earlier Ren 1.0 tokenized Bitcoin providing in favor of a brand new, community-controlled “Ren 2.0” quicker than beforehand deliberate.
The crew clarified that Ren 1.0 “remained and nonetheless stays totally protected and operational.” In accordance with CoinGecko, the asset remains to be value pegged to BTC, buying and selling at $16,600 at writing time.
“Marking this occasion as the top of Alameda’s involvement within the mission by sunsetting Ren 1.0, safeguards the repute, integrity, and therefore long-term prospects of the Ren ecosystem,” stated Ren in its assertion final Friday.
Dangers to Ren?
Regardless of renBTC’s present stability, Maker’s Threat Core Unit said that the DAO’s offboarding of the asset might itself trigger it to de-peg from Bitcoin. “Disabling burns signifies that Maker has a restricted time-frame to offboard the collateral to attenuate potential future problems,” defined Maker.
The group added that its offboarding from RENBTC-A “doesn’t symbolize any risk or deficiency to the Maker Protocol’s monetary well being, nor to its solvency.”
One other FTX-linked Bitcoin asset – soBTC – has already dropped 90% in worth after FTX disabled withdrawals earlier this month. The change was liable for holding the Bitcoin backing these tokens, however was exposed as having zero Bitcoin on its stability sheet as of November tenth.
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