In the world of cryptocurrencies there are several very interesting projects. One of them is Badger DAO and its token BADGER. This project seeks to accelerate the use of Bitcoin in the DeFi world (decentralized finance). If you want to learn more about this project in this article we will tell you all about what it is and how it works.
The word DAO stands for decentralized autonomous organization. The main goal of this project is to be a complete ecosystem where projects across the DeFi landscape collaborate in building and developing products. In this project developers are allowed to align their incentives with decentralized governance. All with the goal of bringing developers together by seeking collaboration over competition.
The Badger DAO project was launched by Chris Spadafora, its founder. The launch took place in September 2020. The community that runs the project is focused on equity and decentralization of token distribution.
Token distribution on Badger DAO was accomplished by retroactive airdrops from users who had previously interacted with governance on known DeFi protocols. Such users created tokenized BTC variables and these were donated to Gitcoin.
The project code was audited prior to launch and the founders still maintain their rewards in order to ensure alignment with the success of the project through proper initiation over the long term.
Badger DAO, como su nombre indica, funciona como una organización autónoma descentralizada que promueve el uso del Bitcoin tokenizado en forma de garantía en los protocolos DeFi. Esto lo logra a través del desarrollo de productos y el fortalecimiento de conexiones DeFi con la garantía de Bitcoin.
Como toda DAO cuenta con un gobierno descentralizado encargado de garantizar una participación incentivada y una oportunidad justa para todos los usuarios del sistema. Este gobierno está impulsado por Aragon, el servicio judicial descentralizado del sistema.
The governance of the protocol is based on community consensus and control over smart contracts to achieve actions and promote the cause of the project. The community and token-holding users are in charge of determining the direction of the project and changing its objectives if necessary. All decisions made by the government are binding and enforced without exception.
Badger DAO also has a liquidity mining program like most DeFi protocols. This program incentivizes users to contribute liquidity to smart contracts. In exchange for their collaboration users receive the platform’s governance token, BADGER. In addition they also receive the DIGG token that is linked to Bitcoin.
It also has a liquidity program for developers where the development of projects is rewarded with tokens. These profits are in addition to the rewards of Gitcoin donations for all those users who contribute to the promotion and development of open source software. Both the program and the issuance fee are controlled by the DAO directly.
The BADGER token is the platform’s native token. It is an ERC-20 token used for protocol governance as well as user incentivization. This token shares with Bitcoin the same amount of the total supply limited to 21 million coins, however, its nature is inflationary. This is because even though it has a limit, coins are released gradually.
The Badger DAO team assures that this currency does not have a monetary value except for the value it receives from the free market itself. Most of the supply is controlled by the DAO and is used depending on governance decisions.
Currently it is no longer possible to edit the full supply of the coin. One of the features that stand out is that there was no ICO (Initial Cryptocurrency Offering) at the launch of this token and the Badger DAO team did not provide any liquidity to any of the exchanges. Both developer and team rewards have a time limit and there is a mechanism devised to launch according to the wishes of the community depending on performance and as a bonus.
As mentioned above, Badger DAO has introduced an awarded token instead of staking BADGER tokens on the platform. Through this token Badger staking has become viable on the platform and can be used in various DeFi protocols.
Staking rewards will also be distributed on this new token and are automatically capitalized. This token has two main objectives. The first is to block more Badger tokens by creating negative selling pressure and the second is to increase the value of the governance token as it has new uses such as collateral, liquidity backing, among others.
Another major Badger DAO product is Digg, a rebasing token. Simply put, Digg resets to the BTC price exactly every 24 hours. It is something like a synthetic version of Bitcoin but without custody that daily tracks the BTC-USD feed.
Each wallet receives a larger amount of tokens when the Bitcoin price increases or conversely, they lose tokens if the price decreases. The main goal is to create a decentralized token without relying on third parties.
Sett is the first Badger DAO product to feature DeFi aggregation and automatic performance optimization on tokenized Bitcoin products. As stated in the project documentation, this creation is based on the performance of the Yearn vault system.
In this system, users deposit their assets and the smart contract automatically rotates them to find the best return. This does not require much user intervention and the rewards increase proportionally to the time the assets remain invested.
Among the strategies used are renBTC, tBTC, sBTC and wBTC. In addition to these, the protocol also employs other native farming strategies. Among these we find simple vaults with variations of multiple strategies, plus compounding strategies, impermanent loss mitigation, BTC neutral strategies.