Wrapped bitcoin added as a collateral type to MakerDAO

An Executive Vote passed to add wrapped bitcoin (WBTC) as a new collateral type to be accepted on Maker’s loan platform. WBTC is an ERC-20 token that represents 1 bitcoin held in custody by BitGo and currently has around $10 million outstanding. The liquidation ratio remains the same as the other collateral assets (150%) while the debt ceiling and stability fee are set at 10 million Dai and 1%, respectively.

Why it matters

• Since Black Thursday Dai’s peg has consistently been above $1, which is a cause for concern for any stablecoin. In order to alleviate this problem, Maker governance scrambled to add USDC with the hope more Dai would be minted to restore the peg. Since then, the price has dropped but has yet to be restored. The addition of WBTC could provide that extra liquidity needed to bring Dai back to $1.

• This won’t be the first time WBTC can be used as collateral in DeFi as the third largest lending platform, Aave, supports it. However, there has not been much interest in using the custodied bitcoin as only 55 WBTC are currently in the system.