MakerDAO Disposes of renBTC as Stablecoin Collateral

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 mild of its connections to the now-bankrupt buying and selling desk Alameda Research. 

Alameda and Ren

As introduced by MakerDAO over Twitter on Thursday, Maker’s governance voted to offboard the RENBTC-A Vault kind in a governance ballot that opened on Monday.

Nearly 75,000 votes had been in favor of the movement, with 0 abstaining or objecting. 

“Considering the acquisition of the Ren challenge by Alameda Research 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 at all times redeemable with BTC 1:1. This permits the worth of the bridge token to constantly observe that of the bottom asset. 

Stablecoins work in a lot the identical manner, with organizations like Tether and Circle holding billions in money and U.S. Treasuries to again their greenback equal tokens. Both organizations launch periodic attestations affirming the standing of their reserves. 

By distinction, MakerDAO backs its DAI stablecoin via a basket of cryptocurrencies like USDC, ETH, renBTC, and others. 

Ren was acquired by Alameda Research earlier this yr and has since acquired quarterly funding from the agency. After the buying and selling desk filed for chapter, Ren introduced final week that it could 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 absolutely protected and operational.” According to 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 challenge by sunsetting Ren 1.0, safeguards the fame, integrity, and therefore long-term prospects of the Ren ecosystem,” stated Ren in its assertion final Friday. 

Risks to Ren?

Despite renBTC’s present stability, Maker’s Risk Core Unit said that the DAO’s offboarding of the asset may itself trigger it to de-peg from Bitcoin. “Disabling burns signifies that Maker has a restricted timeframe to offboard the collateral to attenuate potential future issues,” defined Maker. 

The group added that its offboarding from RENBTC-A  “doesn’t signify any menace or deficiency to the Maker Protocol’s monetary well being, nor to its solvency.”

Another FTX-linked Bitcoin asset – soBTC – has already dropped 90% in worth after FTX disabled withdrawals earlier this month. The alternate was answerable for holding the Bitcoin backing these tokens, however was uncovered as having zero Bitcoin on its stability sheet as of November tenth.

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