DeFi Deep Dive #9: Badger DAO

A Weekly Series Profiling Protocols Featured on DeFi Llama

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Are llamas and badgers friends or enemies? We’ll say friends, thanks to Badger DAO’s mission to bring Bitcoin to DeFi!

Badger DAO appears to be very successful in its mission. About a tenth of the value locked into DeFi is Bitcoin that has been bridged onto the Ethereum ecosystem. Most of this comes is in the form of WBTC.

Other large amounts include HBTC ($1.38B) and renBTC ($370MM). In total over 250,000 BTC live on Ethereum, over 1% of every BTC that will ever exist.

Why are so many BTC crossing the bridge? Bitcoin DeFi is nascent to nonexistent. BadgerDAO is building an ecosystem of products to generate yield on BTC that’s made its way over these bridges.

Badger’s products have proven a popular destination, with over $500MM worth of value locked already in six months since launch.

The Badger team is a busy group of developers. They have launched a large number of tokens and vaults in their first six months of existence with several more planned. Here we highlight a few:

Setts

Sett contains several vaults that serve as DeFi aggregators that allow users to deposit tokenized Bitcoin and earn yield. Yields are automatically optimized according to the Sett’s contracts, to allow users to execute more complex strategies with a hands-off approach.

In addition to yield from the selected strategy, several setts offer bonus rewards in two of the BadgerDAO’s tokens, $BADGER and $DIGG. Often new Setts will launch with rights of first access granted to power users within the community. Each Sett also charge fees, most notably a 20% performance fee, which contributes to the protocol’s revenue.

Digg

The Digg experiment is an experiment in providing an elastic-supply token pegged to BTC. The concept as laid out likens the concept to to Ampleforth’s attempt to create a dollar simply through supply and demand, which has had a lot of volatility but generally hovered around the dollar mark.

The Digg token has had more challenges to date in keeping its peg. The token has traded between 60% to 90% the value of BTC over the past month.

The Digg token attempts to repeg to the BTC price by offering rewards for positive rebases, events that move the currency closer to peg. However, based on their monitoring dashboard, the attempts to date have not been successful.

The team is not deterred by the challenges so far. The topic is frequently discussed on their forums. The team attributes the issues to date to the market downturn in May as the primary cause and recently extended their Rebase Mining event to take another shot at incentivizing a repeg.

ibBTC

The Interest-Bearing Bitcoin, or ibBTC, is another attempt at creating a token pegged to the Bitcoin price through a collaboration with DeFi Dollar. Unlike DIGG, the ibBTC is tied to a basket of DeFi primitives. Per its name, it is an interest bearing token, meaning holders can natively earn interest in the form of rewards earned by farming CRV and Badger. The token is also expanding onto chains other than Ethereum.

Badger

Finally, the Badger governance token allows for voting on the forum, as well as to receive cash flows from protocol fees. The price of the Badger token has generally traded between a range of $8 - $18 USD over the past month.

Overall, the team has been shipping new products and experimenting at an impressive rate. Their wiki claims additional tokens, such as $CLAWS, may be right around the corner.

If Bitcoin waits too long to launch a major DeFi competitor, it may find 21 million coins have already found their way into Badger’s clutches first.


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