Threshold Network proposes decentralised custody for Wrapped Bitcoin

Threshold Network has proposed a plan to enhance the security and stability of Wrapped Bitcoin (CRYPTO:WBTC) by transitioning from the current centralised custody model managed by Bitgo to a more decentralised and permissionless custody system.

This proposal comes amid growing concerns within the decentralised finance (DeFi) community over the centralised control of WBTC custody, particularly following Bitgo's decision to transfer its custody control to a joint venture.

The plan suggests that Threshold Network should be granted merchant privileges to mint and redeem WBTC.

This approach would enable a gradual shift from Bitgo’s centralised management to a decentralised process, aimed at ensuring the safety and stability of the underlying assets.

A decentralised custody model is expected to alleviate market concerns and help maintain the integrity of DeFi protocols that rely on WBTC.

A key aspect of the proposal is to allocate a substantial amount of Threshold’s tokens to Bitgo, giving it a significant stake in the Threshold Network.

This strategy would align Bitgo's interests with the success of the decentralised custody model, encouraging it to support the transition.

It would also provide incentives for other stakeholders to adopt the new model, fostering broader community engagement.

Threshold Network, formed from the merger of Keep and Nucypher, focuses on decentralised cryptographic services governed by its community.

One of its notable products is tBTC, a decentralised bridge that allows Bitcoin holders to securely participate in Ethereum's DeFi ecosystem.

The tBTC token facilitates Bitcoin's interoperability across different blockchains, emphasising security and trust minimisation through its decentralised infrastructure.

By proposing this shift, Threshold Network aims to provide a more secure and resilient custody solution for WBTC, aligning with the DeFi community's broader push for decentralisation and reduced reliance on centralised entities.

If adopted, this move could mark a significant step toward enhancing the security and stability of Wrapped Bitcoin within the DeFi ecosystem.