Threshold Network proposes acquisition of BitGo’s WBTC to address centralization worries Threshold Network proposes acquisition of BitGo’s WBTC to address centralization worries
The proposal includes minting 15% of the T token current supply to be given as a grant to BitGo for its WBTC.
2 min read
Updated: Aug. 29, 2024 at 11:01 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Threshold Network has proposed to acquire BitGo‘s Wrapped Bitcoin (WBTC) product, offering $36.4 million worth of their native T tokens.
The move aims to transition WBTC from centralized custody to Threshold’s decentralized model, merging it with their tBTC Bitcoin (BTC) bridge.
The proposal was presented by NuCypher’s co-founder and Threshold contributor MacLane Wilkison and involves minting additional T tokens, equivalent to 15% of its current fully diluted supply, as a grant to BitGo.
This would make BitGo the largest stakeholder in the Threshold Network while maintaining the bridge’s decentralized nature.
Moreover, the proposed acquisition would combine WBTC’s $9 billion market cap and widespread adoption with tBTC’s permissionless bridging mechanism. Wilkinson argues this approach better achieves BitGo’s goal of multi-jurisdictional and multi-institutional custody.
If accepted, the merger would be implemented in stages. Threshold would gain merchant privileges for WBTC and gradually transfer the existing WBTC supply to decentralized custody, with deposits spread across multiple wallets to ensure security.
Should BitGo decline, Wilkison claims that the DeFi ecosystem will “require a safe and orderly offboarding of WBTC.”
In this case, the additional minting of the T token could be used to subsidize the costs of offboarding WBTC from the ecosystem and migration to alternatives like tBTC and cbBTC.
Addressing the controversy
Notably, the proposal comes following BitGo’s recent announcement that it would adopt a multi-jurisdictional custody model to accelerate its global expansion plan. This would be achieved by transferring WBTC’s control to a joint venture with BiT Global.
This movement raised concerns in the crypto community due to TRON founder Justin Sun‘s involvement, especially after 12,000 BTC were removed from USDD’s backing. USDD is the stablecoin tied to the Tron ecosystem.
Despite BitGo’s CEO Mike Belshe assuring the market that Sun would not be able to move funds, major DeFi protocols, including MakerDAO and Aave, have already taken steps to limit their exposure to WBTC.
Threshold’s proposal aims to address these concerns and ensure the continued stability of WBTC in the crypto ecosystem.
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Author 
Gino Matos
Gino Matos is a law school graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise primarily focuses on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).
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In this article
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Wrapped Bitcoin
$66,036.62
Wrapped Bitcoin delivers the power of Bitcoin with the flexibility of an ERC20 token.
BitGo
BitGo is a market leader in institutional-grade cryptocurrency investment services, providing institutional investors with security, compliance, and custodial solutions for blockchain-based currencies.
Justin Sun has carved a name for himself as a leading figure in the blockchain sector.