## The DAO for the First Cryptocurrency Bank Maker, the MakerDao, has voted to end accepting Wrapped Bitcoin as Collateral. 
- They officially voted to ***change the collateralization percentage to zero***, meaning you can deposit, but you can borrow zero percent of your deposited funds as DAI. This basically means they will make no. more wrapped Bitcoin Collateral Loans
#
 https://media.tenor.com/LZC5r4IoVx8AAAAC/dumpster-fire-disaster.gif 

## Why? Because of Bitgo's Merger with Justin Sun's compnay BitGlobal
#
### Will this lead to the fall of Bitgo and the Rise of Thorchain? Thorchain operates a crypto bank called Thorlend
#
#### Lets look at some of the events in the last 24 hours.
#
- In the last 24 hours, one of the most important companies in crypto **Bitgo**, and it's product **WBTC** or more precisely *Wrapped Bitcoin*, announced a merger with a company called BitGlobal, of which Justin Sun has a controlling interest. 
- This link to Justin Sun, has resulted in many cryptocurrency projects condeming the merger, and in a shocking move, the legendary MakerDao has voted to end accepting wrapped bitcoin as collateral for loans on the crypto bank Maker.
- This is a major blow to Bitgo, which as the creator of wrapped Bitcoin on Ethereum, used mainly for loans, this could be the end of their business and a huge landmark in Bitcoin history similar to the legendary Mount Gox Exchange failure.
#
## Remember legendary Bitconnect ? 
Going, going, gone ..went their reputation
#
 https://media.tenor.com/Av7B5kfiR1oAAAAC/neutrino-protocol-kyber.gif 
#
## What is wrapped Bitcoin, What is MakerDao and Why does this matter?

- Bitgo is the custodian of millions of Bitcoin, which were wrapped or exchanged for WBTC,  a token native to ethereum blockchain, and representing the value of a Bitcoin on the Ethereum blockchain, for the purpose of borrowing against it in a loan taken out from the crypto bank MakerDao.
- The MakerDao is known as the first cryptocurrency bank, where you can deposit collateral like Ether and Bitcoin and borrow against it's value to get USDC, which allows you to spend some of your Bitcoin appreciation gains without selling your Bitcoin, and in many countries this doesn't create a taxable event.
- This is a huge use case for Bitcoin and the Makerdao. It is a huge thing in the Bitcoin ecosystem and it has made Bitgo one of  the largest Bitcoin custodian in the world.
- it's amazing that despite this huge third party risk that Bitgo represents this trade fulfills a huge economic need, so people took the risk. 
- But Bitgo has now merged with BitGlobal, and Justin Sun, whose reputation in the West has resulted in attacks on the Bitgo project leadership in the Twitterverse, and MakerDao, the first cryptobank has voted to eliminate WBTC as collateral for loans. 
- This vote doesn't effect the existing loans, but effects all future loans.
#
## What does this mean for Thorchain?
- I am glad you asked... 
- Thorchain is the first cryptocurrency ecosystem to offer collateralized loans for Bitcoin, Ether and other assets with no wrapped tokens, and thus no 3rd party risk like Bitgo, which acts as the custodian for all the Bitcoin wrapped or exchanged for WBTC which can be deposited in the Maker Bank on Ethereum blockchain. 
- So all this time that Bitgo was the biggest third party risk custodian of Bitcoin in the world, but Bitgo was able to reassure Bitcoiners that their Bitcoin was safe. 
- BItcoiners trusted Bitgo and verified this trust through Proof of Reserves initiatives which allowed bitcoiners to verify their Bitcoins were safe. They could see it on the blockchain explorer.
#
- ***However Justin Sun's BitGlobal doesn't have this degree of transparency***, and Justin Sun doesn't have the same reputation as Bitgo in the West, so...

- Unfortunately combining these two elements distrust and a lack of transparency, and you have a recipe for disaster for Bitgo.
#
##### Bright side for Thorchain fans
#
- Concurrently this is a huge opportunity for Bitcoiners to look for alternatives and that search will bring them to Thorchain, Thorlend and some pretty significant differences between MakerDao and Thorchain's Thorlend.
#
## Thorlend
- No Liquidations
- Fixed interest rates
- Stablecoin loans in USDC
- Other swaps with decentralized exchanges and no Ethereum level transaction fees.
- hmmm...crypto traders have never left Ethereum before over transactions fees right....actually they have... I am remionded of the rise of PanCakeswap in a much less serious situation.
#
## Perfect Storm
- I think we are potentially watching a huge ecosystem changing event, as cryptocurrency moves away from all third party risk situations, especially when trust but verify can't be achieved...
- ...and even a legendary custodian like Bitgo could suffer heavy losses in this highly charged environment post Terra Luna, post Celcius, post 3Arrows Capitol and post FTX.....now is not the time to say ***"trust me, I am the good guy.***
- IMHO... @shortsegments 


### Clarification Notes:
>MakerDAO, is the decentralized autonomous organization behind the DeFi protocol Maker, which is the crypto bank, has approved a proposal to halt new borrowing against BitGo’s wrapped Bitcoin (WBTC).
On Aug. 15th MakerDAO revealed that it was reducing the debt ceiling for all WBTC vaults to zero. This move effectively prevents any new borrowing from these vaults and lowers WBTC’s loan-to-value (LTV) ratio on SparkLend to 0%.




 


Posted Using [InLeo Alpha](https://inleo.io/@shortsegments/cryptocurrency-crisis-as-the-makerdao-votes-to-end-accepting-wrapped-bitcoin-as-collateral--hbu)