In very layman’s terms, just read Ergo’s thread on the issue - x.com
Ergo, in a later tweet, brings up the crux of the issue - “Absence of evidence is not evidence of absence, but none of this would be necessary if the TRC20 BTC custodian was transparent.” As far as many of us are concerned, until any evidence is presented that the TRC20 BTC actually exist and I don’t know why any of us should take any statement regarding his involvement at face value.
Without actual proof that these reserves exist, reserves that many of us have actively looked for and could not find easily (which in of itself is an issue), I don’t see why any statement of trust should be accepted. The reason why you were able to anticipate the reaction to the announcement including his name is not anything malicious towards Justin. It’s the simple fact we want to know where the 60k BTC are.
Until then, I don’t know why anyone should, when they have a choice, invite the wolf into the hen house.
As far as I know, the primary discussion here has been about WBTC on Ethereum, which has clear proof of reserves. I can’t speak to the TRC-20, though I share your concerns.
They do not allow redemption easily. I do not believe they have as much Bitcoin backing the circulating supply as they claim. Probably, have a ton of debt out against the majority of the Bitcoin held.
Another option is we get tbtc into lending protocols, borrow wbtc against it. If we can figure out how to redeem we redeem to convert to tbtc. Otherwise we sell for btc. If wbtc collapses from their relationship with Justin Sun we take their place.
Currently TG has roughly $3M worth of tBTC spread across a number of pools and wallets. Let’s round it up to 60 tBTC.
To borrow against BTC you need overcollateralization. I would normally target 200-300% minimum, but let’s do this calculation with the best possible outcome for your idea and use the lowest collateral ratio (150%), ignore interest payments, ignore that TG needs those tBTC for liquidity and also assume that Justin Sun will embezzle 100% of the underlying BTC - and WBTC drops to zero.
Pretty basic math: 60/1.5=40
You can borrow 40 WBTC and convert to tBTC.
Once WBTC has collapsed you buy it back at 0 so your gain is 40 BTC.
However, if BitGo ultimately declines, it might be worth exploring a potential collaboration with Coinbase for their cbBTC. This could open up new opportunities for the Threshold ecosystem and further our mission of decentralizing wrapped Bitcoin solutions.
I strongly believe that this merger between Threshold’s tBTC and WBTC is not just an economic opportunity but a critical step toward realising our vision of a decentralized, trust-minimized future. It’s not just about merging projects or protocols or assets; it’s about reinforcing the principles that drive us—the importance of permissionless systems where control is distributed, not concentrated.
In my eyes this merger is more than just a strategy; it’s a statement. By bringing together our powerful communities, we are laying the groundwork for a financial ecosystem that is open, secure, and truly decentralized. It’s essential that we start building now, with permissionless as one of our guiding principles, to ensure that our ecosystem remains resilient and aligned with the ideals we all champion… anyone can grab some $T and voice their opinion, even without join discord and sure you will feel listened to.
I feel supporting this proposal is not just the right choice for tBTC; it’s a commitment to the future we’re all striving to create—a future where decentralization and permissionlessness is not just a concept, but a reality.
I urge everyone to share and take part in this gentle battle that ultimately will be for us and our new frens to join this space !
I don’t think historical voting participation is the right metric since there is likely a significant amount of dormant voting power that would come online in the event of a misaligned proposal.
The more relevant consideration is the impact of BitGo’s potential stake weight on wallet selection. There are currently 3,091,061,318 T tokens authorized to stake for tBTC. If BitGo staked the entirety of the 1,655,250,000 token grant immediately they would represent ~35% of the authorized stake. We can see that this results in only a ~0.074% chance of BitGo having a controlling share of any particular wallet (Cumulative probability: P(X>=51) in the image below). You can play around with the assumptions here but, in my subjective opinion, this doesn’t jeopardize the decentralization claims of the bridge.
I don’t want to be overly prescriptive. The final terms would be subject to discussion and agreement between Threshold DAO and BitGo. IMO, the final structure should ensure a maximally safe and secure transition and avoid creating incentives to rush the migration.
The DAO should exercise proper due diligence but I believe BitGo is a high-integrity custodian that has served as a good steward of WBTC over the years. In fact, this is one of the reasons why the proposed change is so unfortunate and resulted in so much pushback from the broader ecosystem.
There is an extreme degree of urgency. We have less than 40 days left before the new joint venture comes into effect and it doesn’t appear anyone else is stepping up with an alternative offer. Threshold has a responsibility to make its best effort to ensure a good outcome for WBTC users.
We have zero responsibility to WBTC users. If WBTC is really in that bad of shape our responsibility is to push it over the edge so TBTC can take the market cap. If it’s that bad we can get the defi protocols to accept TBTC as collateral so we can short WBTC. That benefits current T holders the most.
Isn’t there 6,000 TBTC in circulation? Also Fold is involved with Threshold they can get debt financing. This is more complicated. I’m pretty sure Fold could not survive the crash from WBTC collapsing. Threshold is not just offering to bailout WBTC if it is not beneficial for a large member.
The point is financing a short is definitely doable. Now, whether large members of Threshold Network can survive Bitcoin going to $8k or lower from a large dump that’s different.
Besides, the contagion from WBTC collapsing would easily give shorts hundreds of millions of dollars to pump into projects with proper risk mitigation.
Your point of view heavily relies on a catastrophic scenario where WBTC collapses entirely, which remains speculative. Even if this were to happen, the assumption that shorting WBTC would be a profitable strategy is highly risky and potentially flawed.
Threshold’s proposal offers a much more sustainable path forward. By decentralizing WBTC’s custody, Threshold addresses the centralization risk without creating market panic. This proactive approach avoids the pitfalls of a liquidity crisis, maintains the integrity of the underlying collateral, and ensures that market participants continue to have access to a stable, liquid asset.
Additionally, the economic incentives for BitGo, through the issuance of T tokens, align long-term goals for both decentralization and market stability. This strategy doesn’t gamble on a market collapse but instead builds resilience into the system, ensuring that the ecosystem remains healthy and robust even in challenging conditions.
For the Threshold ecosystem, there are far more positive outcomes to be gained by pursuing this approach than the alternative.
Are there any reasons to believe that this kind of deal could be of interest to BitGo? If not, I don’t understand why anyone would discuss it with a straight face (other than T promotion/marketing)
Just because you cannot redeem doesn’t mean others can’t. If you spoke anywhere near as much nonsensical stuff to Bitgo as you’ve been doing here it’s not hard to see why you were declined/ignored. It would be a major liability to have you as a merchant.
So please stop the FUD now or at least back up your claims with proofs and math.
I’m not sure about the angle that BitGo it hoping to signal with Mike Belshe’s recent interview. It is too bad if truly what they see shining through from our discussion is the talk about T price. I think we have been having a very considered discussion here about realistic network threats that we may encounter with such a huge proposal and ways to mitigate them.
I am in full support of moonbois being moonbois but I don’t think that has been the focus of our consideration. And some of the discussion (i.e. the first comment) is a projection of T price that is meant to clarify the upside for BitGo
I hope BitGo can appreciate the maturity of our community’s consideration of this proposal (and see through all of the price hype).
Threshold DAO has received an offer from a consortium of major DeFi protocols and other WBTC stakeholders to purchase the 15% T mint at $0.02 per token, meaning BitGo now has the option to receive all cash ($33,105,000) and/or their desired mix of T tokens.
Details
Given WBTC’s systemic importance, several protocols with significant exposure to WBTC have expressed interest in supporting the tBTC/WBTC merger proposal via financial participation. These protocols and other stakeholders have formed a consortium to purchase the newly minted T at a price of $0.02 per token, with the cash proceeds being passed on to BitGo. For BitGo, this removes price uncertainty from the original proposal, allowing them to select whatever mix of T token and/or cash they prefer.
The purchased tokens will be eligible to be staked as part of the Beta Staking program, allowing the consortium members to participate directly in custodying the underlying Bitcoin and further decentralizing the protocol. Additionally, several of the participating protocols will appoint representatives to the Threshold Council.
