Badger DAO is a decentralized autonomous organization (DAO) that enables bitcoin to be used as collateral in decentralized finance (DeFi) applications. Throughout 2020 and the first half of 2021, the estimated 1,000 bitcoins in the form of synthetic BTC derivatives used on the Ethereum network rose to more than 250,000 bitcoins as a direct result of DeFi’s meteoric popularity. While DeFi first appeared on the Ethereum network, other blockchains such as Polkadot and Solana gained popularity. And they also serve as foundation platforms for many DeFi projects.
In response to this increased adoption of DeFi, Badger. It was built to serve a growing need for bitcoin usage in DeFi applications across these various blockchain networks.
Badger’s first product, Sett Vaults, allows users to earn returns on their synthetic BTC holdings. Badger’s second product, Digg, is software that manages the DIGG token, an elastic supply cryptocurrency pegged to bitcoin’s dollar price.
BADGER is an Ethereum-based token used for protocol management and distribution of rewards within the Badger DAO. Although BADGER initially only allowed owners to vote on project proposals, its utility has grown since then. And now it’s used to distribute rewards to those who run Sett Vaults.
How does Badger DAO work?
Badger primarily functions as a DAO. Holding the management token, BADGER is empowered to vote on proposals put forward by community members. How many BADGERs a user has. The voting power it has and the proposals that collect enough votes from the community are put into effect on its platform.
Badger has integrated multiple DeFi products into its platform to help make bitcoin a usable asset across blockchains. The development team has partnered with other DeFi projects such as Yearn, Ren, and Curve to bring these products to life.
SETTs, also known as Sett Vaults, are pools of coins where users can lock their tokenized bitcoins and allow smart contracts to manage their assets to earn a return. In other words, SETTs are Badger’s version of an automated DeFi aggregator.
When users deposit tokens in a SETT, they receive bTokens in return. For example, if users deposit BADGER in a Sett Crate, they will receive bBADGER in return. These bTokens represent the user share of assets in SETT. And they are interest-bearing tokens that can be used as collateral in various DeFi applications. Anyone who deposits in a SETT will receive BADGER tokens along with the payout in the appropriate token (based on the parameters specified in that particular SETT). BTokens can then be redeemed (minus a fee) for the original asset along with any earnings.
DIGG is a decentralized “elastic supply” cryptocurrency pegged to the bitcoin price.
Digg’s software programmatically adjusts the supply of the DIGG cryptocurrency through smart contracts that expand or contract the circulating DIGG supply in response to bitcoin price fluctuations.
If demand for DIGG is high, the price of each token could exceed the price of one BTC. Therefore, the Digg protocol automatically increases the DIGG supply to align its price with the market price of BTC. If demand is low, the Digg protocol automatically reduces the DIGG supply to the opposite effect. The process of programmatically adjusting supply to change the price of an asset is called ‘rebase’. And it applies to all wallets holding DIGG tokens.
The DIGG supply is constantly changing “flexibly,” while the share of the token holder in the total DIGG supply remains constant. In other words, if you held 1% of all DIGG tokens before a reissue, you still have the same percentage of coins after the reissue.
DIGG can be used in DeFi protocols like other tokens. And it can be invested in SETTs to generate returns for their owners.
Who created Badger DAO?
Badger was founded in September 2020 by Chris Spadafora, Ameer Rosic, Albert Castellana and Alberto Cevallos. In building the DAO infrastructure, the Badger team collaborated with dOrg, a company that specializes in creating DAO-related software.
Among other achievements, Spadafora is the creator of the Crypto COVID19 Charity Poker Tournament, Rosic is a serial entrepreneur and co-founder of Blockgeeks.com, and Castellana is the co-founder of StakeHound. Spadafora and Rosic are currently part of the Badger operations team, while Castellana and Cevallos assumed consulting roles on the project.
Why does BADGER have value?
As with other cryptocurrencies, the value of BADGER depends on both its tokens and utility on the Badger platform.
BADGER was originally designed as the governance token of the Badger DAO ecosystem. And it has since expanded to provide more functionality within the Badger ecosystem. These include voting rights, stakes in the designated Sett Vault, and rewards for providing liquidity in BADGER-WBTC pools.
BADGER’s total supply is the same as Bitcoin’s, meaning there will only be 21 million BADGER coins according to the software’s rules. Once the full supply of BADGER is in circulation, no more coins can be minted.