Aave DAO has obtained a proposal to combine Coinbase’s upcoming Bitcoin wrapper, cbBTC, into its V3 platform on the Ethereum mainnet and Base.
In a Sept. 10 publish, Aave’s founder, Stani Kulechov, defined that the proposal aimed to place Aave as the popular platform for launching Tier-1 belongings.
Proposal particulars
The proposal seeks to develop the choices for Bitcoin holders collaborating in DeFi on Aave V3. By including cbBTC, customers would achieve extra selections for leveraging their Bitcoin, which may increase liquidity and engagement.
It famous that the combination of cbBTC aligns with Aave’s technique to supply high-quality belongings. 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 significant centralized alternate and a number one DeFi platform may entice mainstream customers and drive the platform’s progress.
As well as, the proposal additionally highlighted issues surrounding Wrapped Bitcoin (WBTC) as a result of its affiliation with TRON founder Justin Solar. It said:
“With the continued modifications with WBTC it’s pertinent to have various wrapped BTC tokens to be used on Aave. With Coinbase because the issuer and custodian, their fame will possible make this a reliable various to WBTC.”
The proposal concluded that whereas cbBTC could take market share from WBTC, it offers a helpful various that might improve BTC adoption on Aave.
Considerations raised
In the meantime, an Aave consumer, Midapple, expressed issues that the proposal to onboard cbBTC “appears untimely, provided that the asset just isn’t but reside.”
The consumer highlighted a number of unanswered questions, together with minting mechanisms, liquidity issues, and proof of reserves.
Midapple additionally flagged potential regulatory dangers, noting that Coinbase may face challenges which may have an effect on cbBTC. Moreover, the consumer raised issues about custodial dangers, mentioning that if cbBTC depends closely on Coinbase, it may pose a single level of failure.
They concluded:
“Evidently the usual vetting course of has been sidestepped totally, and cbBTC is receiving particular remedy that different belongings haven’t been afforded. This units a harmful precedent and raises questions in regards to the integrity of our decision-making course of.”
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