MakerDAO Removes Alameda-linked renBTC As Reserve Collateral

MakerDAO has announced that it has passed a governance vote which will remove Alameda Research-linked renBTC from its stablecoin collateral vaults. 

The move comes after the team at Ren stated that the current Ren 1.0 protocol will be closed. Ren was funded by Sam Bankman-Fried founded Alameda Research. 

RenBTC Removed As Reserve Collateral 

MakerDAO, the issuer of the decentralized DAI stablecoin, has announced that it had passed a governance proposal to remove renBTC from its collateral vaults. The move was announced to reduce the stablecoin’s exposure to what the DAO deems a risky asset following the collapse of FTX and Alameda Research. RenBTC is a wrapped stablecoin asset developed by Ren Protocol, a project backed by Alameda Research. 

MakerDAO enables users to mint the DAI stablecoin by depositing excess crypto as collateral. In 2020, the protocol announced that users could deposit renBTC in special “RENBTC-A” vaults and mint the DAI stablecoin. MakerDAO announced the news in a tweet, stating, 

“This is an important notice to all RENBTC-A users. In light of the uncertainty surrounding the Ren Protocol, and following Risk Core Unit’s recommendation, Maker Governance voted to offboard the RENBTC-A vault type.”

Community Supports Removal 

The vote on the proposal saw 100% of the MakerDAO delegates favoring the removal of renBTC from the collateral vaults. London Business School Blockchain, which functions as a MakerDAO delegate, stated, 

“With Alameda filing for bankruptcy and the elevated risk of renBTC depegging, we support offboard renBTC as collateral to minimize risk to the platform.”

At present, there are several renBTC vaults on Maker. These have collectively loaned out over 850,000 DAI. With the vote to remove renBTC passing, these positions will be liquidated beginning the 7th of December, according to the approved vote. Maker’s risk unit added that the liquidation ratio for the positions will be set at 5000%, guaranteeing that liquidations will be triggered. 

Ren 1.0 To Shut Down 

The Ren project was acquired by the sister firm of FTX, Alameda Research, and began receiving quarterly funding from the firm. However, shortly after the acquisition of Ren, FTX and Alameda filed for Chapter 11 bankruptcy protection. Following this, the Ren team stated that the current tokenized Bitcoin offering, called Ren 1.0, would be shut down. Ren 1.0 would be replaced by a new community-run Ren 2.0. 

The team has also put any new renBTC issuance on hold and asked users to burn the circulating tokens on the Ethereum blockchain and claim them back to the original chain. The team also added that the team would require additional funding to develop the second version of Ren. 

Any Risk To Ren? 

While renBTC is currently stable, Maker’s Risk Core Unit added that the DAO’s offboarding of the asset could lead it to de-peg from Bitcoin. Maker explained that with burning disabled, it had only a limited window to offload the collateral and minimize any potential complications. It further added that the protocol’s offloading from the RENBTC-A vaults does not represent any threat to the overall financial health of the Maker Protocol. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.