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 typical DeFi lending protocols that depend on numerous forms of charges to generate income, customers can deposit Ethereum in numerous kinds as collateral to borrow eBTC at a 0% rate of interest — with no compensation or initiation charges,” Badger mentioned. “We stay up for enabling and inspiring anybody to construct on prime of this one-of-a-kind protocol.”
The eBTC protocol requires a minimal collateralization of 110%, beneath which debtors can be liquidated.
Lido’s Liquidity Statement lab will present 15 stETH as further incentives that can be distributed to early eBTC adopters over a one-month interval. The rewards can be airdropped customers.
“The eBTC protocol introduces an distinctive new use case for Lido Staked ETH, leveraging the ability of staking rewards to offer a extra capital-efficient borrowing choice for Bitcoin on Ethereum,” mentioned DeFiYaco, a enterprise growth lead at LidoDAO. “Lido contributors are comfortable 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, in keeping with DeFi Llama. Knowledge from Dune Analytics reveals 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 instances on Ethereum and topping out at a complete worth locked (TVL) of $2.32 billion in February 2021, in keeping with 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 only $23.3 million in the present day.
Badger mentioned it prioritized safety main as much as the launch of eBTC by partaking 5 totally different safety companions prior 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.
