MakerDAO, the largest DeFi platform today with over $6 billion in Total Value Locked, is winding down its vault for RenBTC, a tokenized form of Bitcoin on the Ren protocol.
This means MakerDAO users will no longer be able to use RenBTC as collateral to mint Dai.
In a notice to users on Nov. 24, Maker announced that it would be offboarding the RENBTC-A vault type “in light of the uncertainty surrounding the Ren Protocol.”
The decision comes after a recommendation from Maker’s Risk Core Unit set a proposal in motion to remove the vault. The governance proposal was passed unanimously with a total of 74,974 MKR tokens used in the voting process.
Maker cited Ren’s acquisition by Alameda and the latter’s subsequent bankruptcy as the reason behind its concerns around the asset as a source of collateral. On Nov. 19, the Ren Protocol team said FTX’s bankruptcy proceedings, which Alameda was a part of, meant that the Ren development team would run out of funds by Q4.
The protocol’s team went on to disable Ren network mints and plans to officially shut down the Ren 1.0 network 30 days after Nov. 18.
Maker’s offboarding of the RenBTC vault will be fairly complicated to execute. Maker acknowledged the possibility that renBTC could “potentially depeg” while disabling burns, seeing as mints have already been disabled.
This means that Maker has a limited time frame to offboard it as collateral and minimize future complications, the protocol said. To complete the process, Maker introduced a series of liquidation parameters, including a 5,000% liquidation ratio and a liquidation limit of 350,000 DAI. These are expected to come into effect after an executive vote on Dec. 7.
“Once the mentioned liquidation parameters are executed, all RENBTC-A positions with a collateralization ratio below 5000% will be liquidated,” said Maker.
The protocol advised all users who would prefer to avoid liquidation to pay off their DAI debt in full and close all RENBTC-A vaults before the executive vote takes place.
“The RENBTC-A offboarding doesn’t represent any threat or deficiency to the Maker Protocol’s financial health, nor to its solvency,” stated the protocol.