MakerDAO (MKR), a decentralized finance (DeFi) heavyweight, has announced the integration of Wrapped Bitcoin (WBTC) into its ecosystem, to make it possible for holders of the latter to use it as collateral for loans in the Maker Protocol, according to a blog post on May 3, 2020.
MakerDAO Now Adopts Wrapped Bitcoin (WBTC)
In a bid to usher in more liquidity into the world of Ethereum and decentralized finance (DeFi), Wrapped Bitcoin (WBTC) has been integrated into the MakerDAO ecosystem by the Maker Governance ecosystem.
As stated in its blog post, WBTC was chosen to become a new collateral asset in the Maker Protocol through an Executive Vote, making it the fourth altcoin to be integrated into the MakerDAO ecosystem, including Ether (ETH), Basic Attention Token (BAT) and Circle’s USD Coin (USDC).
In essence, those interested in obtaining a crypto loan from the MakerDAO platform can now use WBTC or any of the other digital assets to unlock Maker Vaults and generate Dai.
DeFi Comes to Bitcoin
Interestingly, with the addition of WBTC to the MakerDAO ecosystem, the team has further bridged the gap between the Bitcoin blockchain and the Ethereum-powered DeFi ecosystem, as Bitcoin (BTC) holders will be able to turn their BTC into WBTC and use it to borrow funds on the MakerDAO platform.
Bitcoin holders interested in accessing loans on MakerDAO can easily turn their BTC into WBTC following five simple steps on the Oasis Borrow app and open a vault to generate the required amount of Dai. Wrapped Bitcoin is the first ERC-20 standard token to be backed 1:1 with Bitcoin.
Importantly, the MakerDAO team has made it clear that prior to adding the new collateral asset, it thoroughly discussed the advantages, as well as the risks associated with integrating WBTC into its ecosystem.
Commenting on the exciting development, the MakerDAO team said:
“The flexibility of the Maker Protocol makes it possible for any kind of tokenizable digital asset to be added as collateral in the system, provided it has appropriate risk parameters and it’s approved by Maker Governance.”
Specifically, the WBTC risk parameters include a Stability Fee of 1 percent, 150 percent Liquidation Ratio, Debt Ceiling of 10,000,000, Bid Duration of six hours, Liquidation Penalty of 13 percent and an Auction Lot Size of 1 W-BTC, among others.
In related news, earlier in April 2020, BTCManager reported that Matt Luongo, a U.S-based entrepreneur has unveiled the Keep protocol, which is designed to enable Bitcoiners to access DeFi platforms by turning their BTC into tBTC.
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