Aave DAO has acquired a proposal to integrate Coinbase’s upcoming Bitcoin wrapper, cbBTC, into its V3 platform on the Ethereum mainnet and Base.
In a Sept. 10 post, Aave’s founder, Stani Kulechov, defined that the proposal aimed to place Aave as the popular platform for launching Tier-1 property.
Proposal particulars
The proposal seeks to broaden the choices for Bitcoin holders collaborating in DeFi on Aave V3. By including cbBTC, customers would achieve extra decisions for leveraging their Bitcoin, which might enhance liquidity and engagement.
It famous that the mixing of cbBTC aligns with Aave’s technique to supply high-quality property. It permits customers to entry Coinbase’s liquidity whereas benefiting from Aave’s established lending and borrowing options.
The proposal said that the synergy between a serious centralized trade and a number one DeFi platform might appeal to mainstream customers and drive the platform’s development.
As well as, the proposal additionally highlighted concerns surrounding Wrapped Bitcoin (WBTC) due to its affiliation with TRON founder Justin Solar. It said:
“With the ongoing changes with WBTC it is pertinent to have alternative wrapped BTC tokens for use on Aave. With Coinbase as the issuer and custodian, their reputation will likely make this a trustworthy alternative to WBTC.”
The proposal concluded that whereas cbBTC could take market share from WBTC, it supplies a precious different that might improve BTC adoption on Aave.
Concerns raised
In the meantime, an Aave person, Midapple, expressed concerns that the proposal to onboard cbBTC “seems premature, given that the asset is not yet live.”
The person highlighted a number of unanswered questions, together with minting mechanisms, liquidity concerns, and proof of reserves.
Midapple additionally flagged potential regulatory dangers, noting that Coinbase might face challenges which may have an effect on cbBTC. Moreover, the person raised concerns about custodial dangers, stating that if cbBTC depends closely on Coinbase, it might pose a single level of failure.
They concluded:
“It seems that the standard vetting process has been sidestepped entirely, and cbBTC is receiving special treatment that other assets have not been afforded. This sets a dangerous precedent and raises questions about the integrity of our decision-making process.”
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