Wrapped Bitcoin (CRYPTO:WBTC) supplied on Aave (CRYPTO:AAVE) reached an all-time high, despite ongoing concerns regarding the backing of the Bitcoin (CRYPTO:BTC) wrapper.
Data from Dune Analytics revealed that WBTC supply on Aave’s Ethereum (CRYPTO:ETH) network exceeded 37,000 in September, amounting to over $2 billion at current prices.
This surge in total value locked (TVL) comes amid scepticism from cryptocurrency retail investors about the security of the underlying Bitcoin backing WBTC.
Concerns grew after BitGo, the custodian responsible for WBTC’s backing, granted partial control of the multisignature wallet holding the Bitcoin to Hong Kong-based exchange BiT Global on August 9.
This move sparked controversy due to the involvement of Justin Sun, with some in the community expressing fears of potential collateral misappropriation, according to Threshold, a competing Bitcoin wrapper.
Sky (CRYPTO:SKY), formerly known as Maker, responded to these concerns by announcing plans to remove WBTC from its platform on September 19.
However, following discussions with BitGo co-founder Mike Belshe, Sky reconsidered the decision, opting to pause the offboarding process on September 24.
BitGo committed to providing at least 60 days' notice before making any changes to the entities controlling WBTC keys.
Additionally, on September 23, 21.co, the parent company of 21Shares, introduced Chainlink’s (CRYPTO:LINK) proof of reserve for its 21BTC wrapper to address similar concerns.
Coinbase also responded to worries about its cbBTC Wrapped Bitcoin product, assuring users that they would be reimbursed if the exchange lost the underlying Bitcoin.
Despite the uncertainties, WBTC remains the most popular Bitcoin wrapper, with over $9 billion in TVL, according to DeFiLlama.
At press time, the Wrapped Bitcoin price was $65,314.58, and the Aave price was $166.77.