What is Badger DAO (BADGER)?

The Beginner's Guide to BADGER

Badger DAO is a decentralized autonomous organization (DAO) that enables bitcoin to be used as collateral across decentralized finance (DeFi) applications.

Over the course of 2020 and the first half of 2021, the estimated 1,000 bitcoin — in the form of synthetic BTC derivatives — being used on the Ethereum network ballooned to more than 250,000 bitcoin as a direct result of DeFi’s meteoric rise in popularity. While DeFi first emerged on the Ethereum network, other blockchains such as Polkadot, Polygon, and Solana have gained in popularity and also serve as underlying platforms for many DeFi projects.

In response to this increasing adoption of DeFi, Badger was built to serve a growing need for the use of bitcoin in DeFi applications on these various blockchain networks.

Badger’s first product, Sett Vaults, allows users to earn yield on their synthetic BTC assets. Digg, Badger’s second product, is software that manages the DIGG token, an elastic-supply cryptocurrency pegged to the dollar price of bitcoin.

BADGER is an Ethereum-based token used for protocol governance and distribution of rewards within the Badger DAO. Although BADGER originally allowed holders to only vote on project proposals, it has since grown in utility and is now used to distribute rewards to those who manage the Sett Vaults.

badgerdao BADGER

Who created Badger DAO?

Badger was founded in September 2020 by Chris Spadafora, Ameer Rosic, Albert Castellana, and Alberto Cevallos. When building its DAO infrastructure, the Badger team collaborated with dOrg, a company that specializes in building DAO-related software.

Among other accomplishments, Spadafora is the creator of the Crypto COVID19 Charity Poker Tournament, Rosic is a serial entrepreneur and cofounder of Blockgeeks.com, and Castellana is a cofounder of StakeHound. Spadafora and Rosic are currently part of the Badger operations team while Castellana and Cevallos have taken advisory roles in the project.

How does Badger DAO work?

Badger functions primarily as a DAO. Anyone who holds its governance token, BADGER, has the ability to vote on proposals set forth by members of the community. The more BADGER a user owns, the more voting power they have and proposals that garner 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, SETTs are pools of tokens where users can lock up their tokenized bitcoin and allow smart contracts to manage their holdings to generate a yield. In other words, SETTs are Badger’s version of an automated DeFi aggregator.

When users deposit tokens into a SETT, they receive bTokens in return. For instance, if users deposit BADGER in a Sett Vault, they would receive bBADGER in return. These bTokens are interest-bearing tokens that represent the user’s share of the assets in the SETT and can be used as collateral in various DeFi applications. Anyone that deposits in a SETT will receive yield paid out in the appropriate token (based on the parameters laid out in that specific SETT) along with BADGER tokens. BTokens can then be traded back for the original asset along with any earnings (minus a fee).

DIGG

DIGG is a decentralized “elastic-supply” cryptocurrency, pegged to the price of bitcoin.

Digg’s software programmatically adjusts the supply of its DIGG cryptocurrency through smart contracts that expand or contract the circulating DIGG supply in response to fluctuations in the price of bitcoin.

If demand for DIGG is high, the price of each token may exceed the price of one BTC so the Digg protocol automatically increases the supply of DIGG to bring its price back down in line with the market price of BTC. If the demand is low, the Digg protocol automatically decreases the supply of DIGG to have the inverse effect. The process of programmatically adjusting supply to change an asset’s price is called ‘rebasing’ and is applied across all wallets that hold DIGG tokens.

While the supply of DIGG is constantly changing in an “elastic” fashion, a token holder’s proportion of the total supply of DIGG remains stable. In other words, if you held 1% of all DIGG tokens before a rebasing event, you would still hold the same percentage of coins after the rebasing.

DIGG can be used in DeFi protocols just like any other token, and can also be deposited into SETTs to generate a yield for its holders.

Why does BADGER have value?

As with other cryptocurrencies, BADGER’s value is tied to both its tokenomics and utility within the Badger platform.

BADGER was originally conceived as the governance token of the Badger DAO ecosystem and it has since expanded to provide more functionalities within the Badger ecosystem. These include voting rights, staking in its designated Sett Vault and rewards for providing liquidity in BADGER-WBTC pools.

The total supply of BADGER mirrors that of Bitcoin, meaning that according to the software’s rules, there will only ever be 21 million BADGER tokens. After the full supply of BADGER is in circulation, no further tokens can be minted.

Why use BADGER?

Badger DAO helped the world’s first cryptocurrency become a functioning part of the DeFi world. Crypto devotees and casual investors alike may find value in Badger’s goal to make the Bitcoin DeFi ecosystem as rich and full as possible.

Badger has made its solutions viable and organized a DAO structure that is conducive to a collaborative and an active community that strives for the continuous improvement of its products.

Users who want to join and participate in the Badger community may want to obtain BADGER for the purposes of system governance. Those who want to take advantage of Badger’s diverse DeFi offerings may find value in owning BADGER to stake as collateral and use in yield farming strategies.