Tech

DeFi Platforms Respond to WBTC Concerns as Whale Accumulates $118M

3 months ago
Bitcoin Ethereum News

TLDR

  • An unknown crypto whale has accumulated 1,953 Wrapped Bitcoin (WBTC) worth $118 million in the past week.
  • This accumulation comes amid controversy surrounding WBTC’s ownership structure after BitGo announced plans to transfer control.
  • MakerDAO and Aave have taken steps to limit or replace WBTC usage on their platforms due to these concerns.
  • Wintermute, a major crypto market player, has sold off nearly its entire WBTC holdings on Binance.
  • The WBTC controversy may create opportunities for alternative wrapped Bitcoin products, particularly on the Solana blockchain.

An unknown crypto whale has been accumulating large amounts of WBTC, while other major players are divesting their holdings, and alternative wrapped Bitcoin products may be poised to gain market share.

According to blockchain analytics service Lookonchain, an unidentified wallet address has acquired 1,953 WBTC, valued at approximately $118 million, over the past week.

This accumulation occurred at an average price of $58,853 per token. The most recent purchase, made within a 12-hour period, added 347 WBTC worth $16 million to the whale’s holdings.

This large-scale accumulation comes at a time of uncertainty for WBTC.

On August 9, BitGo, the team behind WBTC, announced plans to transfer control of the token to a joint venture involving itself, Hong Kong-based investment manager BiT Global, and Justin Sun’s Tron ecosystem. This announcement sparked concerns within the crypto community about the token’s ownership structure and security.

In response to these concerns, major decentralized finance (DeFi) platforms have taken action.

MakerDAO, a leading lending protocol, approved and executed a proposal to prohibit new borrowing against WBTC collateral on its Sparklend platform. Similarly, Aave is reportedly considering a proposal to replace WBTC with an alternative wrapped Bitcoin token, Threshold Network’s TBTC.

The controversy has also prompted significant market movements. Wintermute, a major player in the crypto market, has sold off nearly its entire WBTC holdings on Binance. On-chain data reveals that Wintermute transferred 2,617 WBTC tokens to Binance, with a market value of approximately $155.27 million.

These developments have created potential opportunities for alternative wrapped Bitcoin products, particularly on the Solana blockchain.

Jupiter, a Solana-based decentralized exchange (DEX) aggregator, currently holds about $70 million in WBTC out of around $106 million that has been bridged to Solana using the Wormhole bridge. However, Jupiter’s anonymous co-founder, known as meow, has indicated that they will “likely” be looking to diversify their wrapped Bitcoin exposure in light of recent events.

The Solana ecosystem, which currently has a relatively small wrapped Bitcoin presence compared to Ethereum, may see growth in this area. There are approximately 154,000 WBTC on Ethereum, while only about 1,800 WBTC have been bridged to Solana via Wormhole. Alternative wrapped Bitcoin tokens on Solana, such as tBTC and 21BTC, currently have limited market presence but could potentially expand their footprint.

Infra, the anonymous labs lead at Raydium, a Solana-based protocol, commented on the situation, stating,

“It seems like a good opportunity for WBTC alternatives, especially Solana-focused solutions, to carve out some space from WBTC’s current moat.”

Source: https://blockonomi.com/defi-platforms-respond-to-wbtc-concerns-as-whale-accumulates-118m/