Badger leverages stETH as collateral to generate staking yield for each the eBTC protocol and debtors.
Badger Finance, a Bitcoin-focused DeFi collective, has launched a 0% curiosity Bitcoin lending protocol leveraging Lido’s liquid staking token, stETH.
Badger deployed its eBTC protocol and token on March 26, permitting customers to borrow a yield-bearing “artificial Bitcoin-pegged stablecoin” utilizing Ether as collateral.
Regardless of charging 0% curiosity to debtors, Badger will generate income by staking collateral property by way of Lido’s stETH liquid staking token and taking a 50% reduce of the rewards. Debtors will earn the remaining 50% of rewards, rendering eBTC a yield-bearing asset.
“In contrast to standard DeFi lending protocols that depend on varied kinds of charges to generate income, customers can deposit Ethereum in varied varieties as collateral to borrow eBTC at a 0% rate of interest — with no compensation or initiation charges,” Badger mentioned. “We sit up for enabling and inspiring anybody to construct on high of this one-of-a-kind protocol.”
The eBTC protocol requires a minimal collateralization of 110%, beneath which debtors might be liquidated.
Lido’s Liquidity Statement lab will present 15 stETH as extra incentives that might be distributed to early eBTC adopters over a one-month interval. The rewards might be airdropped customers.
“The eBTC protocol introduces an distinctive new use case for Lido Staked ETH, leveraging the facility of staking rewards to offer a extra capital-efficient borrowing possibility for Bitcoin on Ethereum,” mentioned DeFiYaco, a enterprise improvement lead at LidoDAO. “Lido contributors are blissful to assist the rising utility for stETH throughout the DeFi and are trying ahead to seeing what eBTC can obtain.”
Lido is each the main liquid staking supplier and DeFi protocol, at present commanding a TVL of $35.5 billion, based on DeFi Llama. Knowledge from Dune Analytics exhibits Lido controlling 30.3% of Ether’s provide.
Badger’s fall from prominence
Badger was as soon as a number one DeFi protocol, pioneering DeFi use circumstances on Ethereum and topping out at a complete worth locked (TVL) of $2.32 billion in February 2021, based on DeFi Llama.
Nonetheless, Badger has since fallen into decline amid rising competitors from different protocols and fallout from a front-end assault that resulted in a $120 million loss on Dec. 2, 2021. Badger’s TVL slumped 98% from $1.2 billion on the time of the assault to simply $23.3 million right this moment.
Badger mentioned it prioritized safety main as much as the launch of eBTC by partaking 5 completely different safety companions up to now month. The brand new protocol has undergone a number of sensible contract audits, an financial threat evaluation, and supplied a pre-launch bug bounty.
