Thread by @weremeow

1/ One of the most challenging and unspoken issue facing the @solana ecosystem are the wrapped Sollet tokens, namely soBTC, which is used widely across lending and AMM platforms.

The problem? These tokens are issued by FTX (or Alameda, no one really knows)

2/ These tokens were launched very early in the Solana DeFi cycle to help generate liquidity in the space, and supposed to be backed 1-1 by BTC or ETH.

But unlike wBTC (which I helped to start), there was no formal process and no one knows if FTX still have the underlying assets

3/ This is very problematic, because practically all the major DeFi platforms have soBTC assets as collateral since it has long been accepted as the defacto BTC in the Solana space.

If soBTC turns out to have no value, then it could worsen the contagion along more dimensions.

4/ It is one thing for prices to fall and have liquidations be called, which is normal functioning of DeFi markets. It is another thing to have the underlying assets be completely invalid, which is really not supposed to happen.

5/ It is important for @solana / @SolanaFndn to help push FTX and Alameda for more clarity on the situation, and for oracle providers like @PythNetwork and @switchboardxyz to share more details on how they plan to handle these assets.

6/ If it turns out that the assets are not backed anymore, we need to mark them down, take the loss as an ecosystem and remove this assets completely from the space asap. Not pretty, but better to happen now rather than later.

7/ We need to demand far higher transparency standards in the future, even at the cost of growth.

For now, we need to rapidly resolve this dilemma, and better to do it now, along with all the un-scamming that needs to happen for us to be healthy again.