Threshold Network has proposed to acquire BitGo’s Wrapped Bitcoin (WBTC) product for $36.4 million worth of their native T tokens. The goal is to transition WBTC from centralized custody to Threshold’s decentralized model by merging it with their tBTC Bitcoin bridge. The proposal presented by MacLane Wilkison, co-founder of NuCypher and contributor to Threshold, involves minting additional T tokens as a grant to BitGo, making them the largest stakeholder in the network while maintaining decentralization.
The proposed acquisition would combine WBTC’s $9 billion market cap and widespread adoption with tBTC’s permissionless bridging mechanism, aligning with BitGo’s goal of multi-jurisdictional and multi-institutional custody. The merger would be implemented in stages, with Threshold gradually transferring the existing WBTC supply to decentralized custody and spreading deposits across multiple wallets for security. If BitGo declines the proposal, the additional minting of T tokens could be used to subsidize the costs of offboarding WBTC from the ecosystem and migrating to alternatives like tBTC and cbBTC.
The proposal from Threshold Network comes amidst controversy surrounding BitGo’s recent announcement to adopt a multi-jurisdictional custody model through a joint venture with BiT Global, involving TRON founder Justin Sun. Concerns arose in the crypto community after 12,000 BTC were removed from USDD’s backing, the stablecoin tied to the Tron ecosystem. Despite assurances from BitGo’s CEO Mike Belshe that Sun would not be able to move funds, major DeFi protocols have taken steps to limit their exposure to WBTC.
Threshold’s proposal aims to address these concerns and ensure the stability of WBTC in the crypto ecosystem. The proposal seeks to transition WBTC to decentralized custody under Threshold’s model, combining the strengths of WBTC’s market cap and adoption with tBTC’s bridging mechanism. By acquiring WBTC and minting additional T tokens, BitGo would become the largest stakeholder in Threshold Network, maintaining decentralization while achieving BitGo’s custody goals in a multi-jurisdictional and multi-institutional manner.
The proposed merger with BitGo aligns with Threshold Network’s vision of decentralized custody and permissionless bridging for Bitcoin. Should BitGo decline the proposal, Threshold would facilitate the safe offboarding of WBTC from the ecosystem using the minted T tokens. The proposal is a response to concerns in the crypto community regarding BitGo’s recent custody model changes and involvement with TRON founder Justin Sun. With plans to gradually transfer WBTC to decentralized custody, Threshold aims to ensure the continued stability of WBTC in the changing market landscape.
