A $20 million synthetic rebased Bitcoin token launch has been launched – but will it work?
Bitcoin synthetic from BadgerDAO, DIGG, goes on air NEWS
After weeks of anticipation and a series of closely observed preparatory steps, BadgerDAO’s synthetic Bitcoin, DIGG, is now operational and can be requested by qualified addresses on the Ethereum main network.
The launch will be greeted with enthusiasm by a perhaps overzealous community, which has been igniting Twitter with „wen DIGG“ (when DIGG?) for weeks. Despite all the memes and excitement, however, there is some serious technical weight behind Bitcoin Bank platform the distribution and maintenance of the newest Bitcoin asset on Ethereum.
Ultimately, however, now that DIGG is on the open market, the forces are what will determine the long-term success of the Bitcoin synthetic asset – success that may not be guaranteed.
Fair and flat launch
According to BadgerDAO lead developer and distribution architect Jon Tompkins, the amount of DIGG required for each qualified account was determined using a formula centered on the activity of an Ethereum address in the BadgerDAO application. Factors such as total Badger tokens earned on the native platform, the ratio of Badger earned and staked to total bet days were taken into account.
To avoid a deep pocket „whale“ overallocation, however, the DAO approved a 1.75 root application to smooth the distribution between the addresses. As Tompkins wrote in the original DIGG distribution proposal, this root means that although in a linear distribution the top 100 addresses would be eligible to receive more than 70% of the DIGG, they may only claim 33%.
Tompkins said that of the 600 DIGG tokens currently available, the top address would receive 8.75 DIGG, while the average of 8517 eligible addresses could claim 0.07 of a token.
The aim of this distribution would be to allow the project to „reward the little ones who are strong supporters of Badger, but not harm the whales entirely,“ Tompkins said.
Maintaining a demarcation
Now that the token is active, the rebasing games begin.
Algorithmic stables have been a hot topic in DeFi circles in recent months as one of the most popular trading vehicles. The assets, which are primarily aimed at tracking the price of the US dollar, have „rebasing“ capabilities that dynamically expand or contract the total supply of the asset based on predefined parameters such as price or time.
So far, however, they have proven to be much more effective in enriching users who know how to play the rebasing parameters than in creating truly stable assets.
DIGG will possibly be the first Bitcoin of synthetic rebasing and certainly the first to introduce this method of distribution. Outside the gate, users will be able to stake their DIGG in an income vault, use it to provide liquidity to the DIGG/WBTC Sushiswap and Uniswap pairs, keep the main asset in anticipation of positive rebasing or sell the tokens in the Open market.
Although there has been speculation about how DIGG will behave and what the best strategies might be, it is unclear to what extent the asset will be able to achieve the desired stability given the volatility of the BTC and the exclusive launch of DIGG.
In an earlier interview with the Cointelegraph, BadgerDAO founder Chris Spadafora expressed hope that additional future stabilisation mechanisms could help DIGG to better track BTC, however.
„What we want to do with our vault system is really on a large scale … let’s call it ‚buying and selling dictators‘. So through automated strategies, we can buy on time and sell on time to optimise returns for users,“ he said.
The next safes designed to programmatically play the rebase games are designed to do just that, but given the theoretical scenario of the unmapped game, it is impossible to say whether the safes will be enough to stabilize DIGG – or what happens after the safes‘ incentives dry up.
In the end, after weeks of anticipation, instead of „Wen DIGG? (when DIGG?) BadgerDAO participants are queuing up to see their luck in the matter now should ask themselves, „What’s next?