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Creating Dai with Bitcoin! MakerDAO announces the addition of WBTC as a new collateral option.

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Creating Dai with Bitcoin! MakerDAO announces the addition of WBTC as a new collateral option.

The decentralized stablecoin project MakerDAO has announced the addition of WBTC as a new collateral option. MakerDAO stated that WBTC will bring greater liquidity to the Ethereum and decentralized finance (DeFi) ecosystem.

Adding WBTC as New Collateral

According to the official announcement released by MakerDAO on May 3rd, the MKR token holders in the decentralized stablecoin project MakerDAO community have voted to accept Wrapped Bitcoin (WBTC) as a new collateral asset in the Maker protocol. This means that users can now choose to collateralize WBTC in addition to ETH, BAT, and USDC to create CDPs and generate the decentralized stablecoin Dai. WBTC is an ERC20 token pegged to Bitcoin, essentially representing Bitcoin on the Ethereum blockchain. MakerDAO stated in the press release:

“WBTC will help bring greater liquidity to the Ethereum and decentralized finance (DeFi) ecosystem as well as decentralized exchanges (DEXs).”

According to MakerDAO, converting Bitcoin (BTC) to Wrapped Bitcoin (WBTC) requires registering and completing KYC verification on Coinlist first. Once the conversion is done on the platform, users can send WBTC to compatible wallets such as Metamask, Ledger, or Trezor, and then interact with the Maker protocol to use WBTC as collateral to create Dai.

WBTC Risk Parameters

The risk parameters for WBTC, collectively decided by MKR token holders, are as follows:

  • Debt Ceiling: 10 million Dai
  • Stability Fee: 1%
  • Liquidation Ratio: 150%
  • Initial Dai Generation Minimum: 20 Dai
  • Collateral Auction lot size: 1 WBTC
  • Minimum bid increase for collateral auctions: 3%
  • Collateral auction duration: 6 hours
  • Maximum auction duration: 6 hours
  • Liquidation Penalty: 13%

Additionally, in the same vote, MKR token holders also agreed to lower the stability fee for USDC to zero and officially ratified the initial Maker Improvement Proposals (MIPs).

Further Reading

  • [Insights] What is MakerDAO's Intention in Using USDC as Collateral for DAI?
  • [MakerDAO Blog] Top 10 Use Cases and Advantages of DAI Stablecoin

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