Maker Governance Approved Wrapped Bitcoin as DAI Collateral

MakerDAO’s governance record marked a bundled executive vote as passed on May 2, 2020, approving Wrapped Bitcoin, or WBTC, as collateral in the protocol that generated the DAI stablecoin. The decision created a new route between Bitcoin capital and Ethereum-based credit, but it did not place native bitcoin inside Maker.

The chronology contains an important boundary. The legacy executive record identifies May 2 as the passage date. Maker publicly announced on May 3 that WBTC could be used in Vaults, and contemporaneous reporting also treated May 3 as the operational approval date. This reconstruction therefore assigns May 2 to the governance decision while distinguishing it from the public confirmation and availability reported on May 3.

Bitcoin reached Maker through a wrapper

WBTC was an ERC-20 token representing bitcoin held under a custodial framework. Its 2019 white paper described merchants initiating minting and redemption requests while a custodian controlled the corresponding bitcoin. Published reserve addresses and token issuance were intended to make the one-for-one backing independently observable.

That design made bitcoin-denominated value compatible with Ethereum applications, including Maker’s smart contracts. It also introduced dependencies absent from native bitcoin: custody, merchant operations, the WBTC token contract and Ethereum itself. A Maker Vault backed by WBTC was consequently exposed both to changes in bitcoin’s market value and to the reliability of the wrapping system.

WBTC became Maker’s fourth approved collateral asset, joining ether, Basic Attention Token and USD Coin. The development widened Maker’s collateral base beyond Ethereum-native assets and a dollar-backed stablecoin, potentially connecting a larger pool of cryptocurrency capital to DAI creation.

Initial parameters limited the exposure

Maker’s April 28 governance poll proposed a 1% stability fee, a debt ceiling of 10 million DAI and a 150% liquidation ratio for the new WBTC collateral type. It also specified a 13% liquidation penalty, one-WBTC auction lots and a minimum Vault debt of 20 DAI.

The 10 million DAI ceiling capped how much debt the entire WBTC collateral category could initially generate. A 150% liquidation ratio meant that a position required collateral valued at least 1.5 times its DAI debt before accounting for further price movements and fees. Expressed mechanically, 100 DAI of debt required at least $150 of oracle-valued WBTC at that threshold. This calculation explains the parameter; it does not imply that the position was protected from losses or continuously safe at that value.

Because bitcoin can move quickly and Maker depended on price oracles and collateral auctions, overcollateralization reduced rather than eliminated market risk. The wrapper added another category of failure: even accurately priced WBTC could become impaired if the bitcoin backing, minting process or redemption system failed.

The vote was also a policy bundle

The May 2 executive proposal did more than add WBTC. It lowered the annualized stability fee on the USDC collateral type from 6% to 0% and ratified Maker’s initial 13 improvement proposals plus two subproposals. The improvement package established formal processes for governance and collateral onboarding.

Combining WBTC onboarding with a zero USDC stability fee can be interpreted as a supply-side response to pressure around DAI’s one-dollar soft target: cheaper borrowing against USDC and an additional collateral category could make more DAI available. That is an interpretation of the policy combination, not proof that either change would restore the target or produce lasting demand.

The bundle also illustrated the reach of token-weighted governance. MKR support could simultaneously change credit pricing, approve a new risk exposure and formalize institutional procedures. The on-chain process made the decision auditable, but it did not establish that voting influence was broadly distributed among users.

What May 2 established

The verified development was authorization, not demonstrated adoption. No event-day evidence reviewed for this reconstruction establishes how much WBTC entered Maker Vaults on May 2, how much DAI it generated or whether the addition improved DAI’s market price. No cryptocurrency price or trading-volume claim is therefore made.

What May 2 established was narrower and consequential: Maker governance accepted a custodial representation of bitcoin as collateral, connecting two previously separate asset systems while deliberately containing the first deployment through risk parameters and a 10 million DAI ceiling.