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Aave DAO has acquired a proposal to combine Coinbase’s upcoming Bitcoin wrapper, cbBTC, into its V3 platform on the Ethereum mainnet and Base.
In a Sept. 10 submit, 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 increase the choices for Bitcoin holders taking part in DeFi on Aave V3. By including cbBTC, customers would achieve extra decisions 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 trade and a number one DeFi platform may appeal to mainstream customers and drive the platform’s development.
As well as, the proposal additionally highlighted considerations surrounding Wrapped Bitcoin (WBTC) resulting from its affiliation with TRON founder Justin Solar. It said:
“With the continuing 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 repute will possible make this a reliable various to WBTC.”
The proposal concluded that whereas cbBTC might take market share from WBTC, it gives a beneficial various that might improve BTC adoption on Aave.
Issues raised
In the meantime, an Aave consumer, Midapple, expressed considerations that the proposal to onboard cbBTC “appears untimely, provided that the asset shouldn’t be but reside.”
The consumer highlighted a number of unanswered questions, together with minting mechanisms, liquidity considerations, 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 considerations 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 completely, and cbBTC is receiving particular remedy that different belongings haven’t been afforded. This units a harmful precedent and raises questions concerning the integrity of our decision-making course of.”