MakerDAO is one of the most well-known stablecoins and decentralized Liquidity Pools in DeFi. Recently, the decentralized exchange has issued a petition for its community members to collect opinions on the closure of renBTC as collateral for stablecoins.
It is important to note that renBTC is a wrapped Bitcoin token that was created by Ren Protocol.
However, Ren Protocol has now been deemed a high-risk protocol on account of its association with the Alameda Project. The FTX Group includes Alameda Research which filed for a Chapter 11 bankruptcy proceeding this month.
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The native token of MakerDAO is known as Dai stablecoin. The governance vote would let users vote on the matter.
MakerDAO Delists renBTC Token due to its Association with Alameda Research
MakerDAO project allows investors to mint new Dai stablecoins in exchange for depositing extra cryptocurrency collaterals.
Since 2020, MakerDAO users have been allowed to use renBTC tokens to store in special RENBTC-A accounts and generate more dai tokens in exchange for their special reserves. After the bankruptcy filing of FTX, Ren project issued a new statement.
The management of Ren Protocol suggests that the Ren 1.0 token will be discontinued and it will be replaced by a new decentralized token called Ren 2.0. The team claims recently that Ren 2.0 project will complete by the end of the ongoing year.
Following the news, renBTC has been put on hold, and Ren developers have advised the investors to burn circulating supply on the Ethereum network.
MakerDAO management has marked down the Ren project as the risk core unit. The DEX has noticed the issues connected to the project since the halting of renBTC mints.
Under these circumstances, renBTCs can lose their peg to Bitcoin and crash down to zero. MakerDAO has made a proposal to close renBTC vaults and liquidate all its connected loan positions.
London Business School Blockchain, which partners with MakerDAO, has claimed that they are in favor of delisting renBTC as collateral to mitigate the risks to MakerDAO.
At present, there are 850K dai mints tethered to 850K dai. Liquidation will start soon with an estimated ratio of 5000%. The massive collateral ratio means that the liquidations will trigger organically as per the MakerDAO proposal.
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