- A new proposal has been brought up in Compound by Alameda Researches, recently.
- The member has proposed to increase the WBTC collateral factors of up to 65%.
- When the article was written, there were around 125,184 votes from 12 different addresses in favor of the proposal.
A new proposal has been brought up in Compound by Alameda Researches, recently. The member has proposed to increase the WBTC collateral factors of up to 65%. When the article was written, there were around 125,184 votes from 12 different addresses in favor of the proposal. Alameda Research itself and Kyber Networks were the leaders in terms of total votes. On the other hand, there were 34 votes from two addresses who were against the proposal. The proposal created on 5th July and it became active on the same day.
Alameda Research is a digital assets trading and management firm established two years ago in October of 2017. The firm manages almost $100 million worth of digital assets and trades up to $1.5 billion of major coins, altcoins, and its derivatives on a daily basis. With years of experience from big tech giants like Optiver, Jane Street, Facebook, Susquehanna, and Google the company is said to have the most sophisticated trading systems in the cryptocurrency industry and OTC spreads.
WBTC Added To The Compound Platform In 2019
On January 19th, 2019 Compound community had voted whether the wrapped BTC should be added to its platform or not. Consequently, the majority of the members were in favor of it and added to the Compound mainnet. The cWBTC is a Smart Contract that was verified and tested by Certora. cWBTC enabled the users to gain interest as well as borrow money using the WBTC. The collateral factor specified as 0% which meant that the collateral could not be used to borrow against.
New Proposal Would Enable User To Borrow Wbtc Against Collateral
In its recent proposal in Compound’s proposal, it aims at increasing the collateral factor of Wrapped BTC or WBTC from 0% to 65%. As of now, the WBTC in the Compound can only be borrowed or lent, but it cannot be used as collateral. This new proposal would enable us to loan WBTC by using as much as 65% of its value as collateral.
DAI, USDC, And Eth Already Have A Collateral Factor Of 75%
As of now, cryptocurrencies like DAI, USDC, and ETH have a collateral factor of 75%. Hence, the increment of WBTC’s collateral factor was an important move because BTC and WBTC have better and more market liquidity than any of the aforementioned tokens. Moreover, WBTC is known to have market liquidity as same as that of Ethereum’s (ETH). Moreover, in the details section of the proposal, Alameda Research has justified this will in no way trigger any liquidations because this will only increase the Collateral Factor and nothing else.