Justin Sun-advised wrapped bitcoin (WBTC) has relaunched on Sun-founded TRON; however, the new product has seen zero adoption, and the abandoned old version still has approximately 100 WBTC tokens.
The “Transparency” page on WBTC’s website labels BTC on TRON as a “New” product using the smart contract at TYhWwKpw43ENFWBTGpzLHn3882f2au7SMi.
This contract was deployed several months ago on July 23. However, the novelty of the product is questionable. WBTC launched on the TRON blockchain early in 2021.
Read more: Justin Sun-advised HTX has redeemed 7,300 WBTC it did not disclose
Shortly after Sun was added as an advisor to the project, this version of WBTC on TRON was removed from the WBTC website.
However, the smart contract for this version, at TXpw8XeWYeTUd4quDskoUqeQPowRh4jY65, shows that it still has a total supply of nearly 100 WBTC, presumably corresponding to 100 BTC held in the reserves for this product.
This is infinitely more supply than the so-called “new” version, which, according to the WBTC website and its smart contract, has a total supply of zero.
It’s not clear why the transition to the new contract, nor is it clear why the abandoned contract has seen more adoption.
WBTC DAOs
WBTC claims to be governed by decentralized autonomous organizations (DAOs) — a small DAO that governs merchant approvals, and a large DAO that Mike Belshe of WBTC custodian BitGo claimed “owns the smart contract.”
These DAOs are rarely used and still include Three Arrows Capital and Alameda Research as merchants, despite the failure of those firms.
The last transaction interacting with the WBTC DAO was 1,040 days ago, suggesting it hasn’t approved any of the new products.
Sun’s other tokenized bitcoin product
WBTC isn’t the only tokenized BTC product that Sun is involved with, as an exchange he owns, Poloniex, has its own product on TRON.
This version doesn’t disclose where its collateral is held and has a supply of 17,545 BTC, approximately 175 times larger than the two WBTC on TRON products combined.
Additionally, this tokenized BTC product made up approximately 51% of all BTC on Sun-owned HTX in a September analysis by Protos.
Read more: Poloniex proof-of-reserves and WBTC backing missing
Poloniex, the exchange that seems to be behind the product, had previously promised that it would complete a proof-of-reserves process that would involve third-party verification.
However, it’s never completed that process.
Sun eventually admitted in a post on X that “all exchanges in the industry have already implemented proof of reserves,” despite the exchange he owns not implementing that process.
He then doubled down, claiming “there is only one explanation for why” exchanges fail to have proof of reserves, namely, “they are unable to meet the requirements.”
This would seem to imply Poloniex is unable to meet the requirements, and the fact that its products are used at HTX suggests that the risks inherent in these issues at Poloniex are also a risk to HTX.
Protos reached out to WBTC for clarification on whether the DAOs were consulted, why they chose to switch contracts, what the key differences between the contracts are, and why the old contract still has tokens outstanding, but it didn’t respond before publication.
