After weeks of anticipation and a painstaking series of preliminary steps, BadgerDAO’s synthetic rebasing Bitcoin, DIGG, is now live and claimable for qualified addresses on Ethereum mainnet.
The release will be eagerly welcomed by a perhaps overzealous community, one that has been relieving Twitter with “wen DIGG” for weeks. However, despite all the memes and excitement, there is some serious technical weight behind both its distribution and maintenance the latest Bitcoin asset on Ethereum.
But now that DIGG is out in the wild, market forces will ultimately determine the long-term success of the synthetic Bitcoin asset – success that may not be assured.
Fair, flat launch
According to BadgerDAO core contributor and distribution architect Jon Tompkins, the amount of DIGG due for each eligible account was determined using a formula that focused on the activity of an Ethereum address in the BadgerDAO app. Factors such as the total number of Badger tokens earned on the native platform, the betting ratio between Badger and Badger and the total number of betting days were taken into account.
To avoid an overcrowding of “whales” with deep pockets, the DAO approved an application of a 1.75 root to smooth out the distribution between addresses. As Tompkins wrote in the original DIGG distribution proposalthis root means that while in a linear distribution the top 100 addresses would be eligible to receive more than 70% of DIGG, they could instead claim only 33%.
Tompkins said that of the 600 DIGG tokens currently available, the top address will receive 8.75 DIGG, while the average of 8,517 eligible addresses will be able to claim 0.07 of a token.
The purpose of this distribution was to enable the project to “reward the little boys who are strong badger supporters, but who don’t completely harm the whales,” Tompkins said.
Hold a pin
Now that the token is live, the rebase games begin.
Algorithmic stablecoins are one hot topic in DeFi circles in recent months as one of the most popular commercial vehicles. The assets, which are primarily intended to track the price of the US dollar, have “rebasing” characteristics dynamically expand or contract the total supply of the asset based on preset parameters such as price or time.
However, so far, they have proven to be much more effective in enriching users who know how to play the rebase parameters than with creating truly stable assets.
DIGG will possibly be the very first synthetic rebasing Bitcoin, and certainly the first with this distribution method. Outside the gate, users can place their DIGG in a profitable vault, use it to provide liquidity to DIGG / WBTC Sushi Swap and Uniswap pairs, hold the core assets pending a positive rebase, or sell the tokens on the open market.
While there has been speculation about how DIGG will perform and what the best strategies might be, it is ultimately unclear to what extent the asset will be able to maintain the intended peg, given BTC’s volatility and DIGG’s unique launch.
In an earlier interview with Cointelegraph, BadgerDAO founder Chris Spadafora expressed hope that additional upcoming stabilization mechanisms could help DIGG better track BTC.
“What we want to do with our hermitage is really on a grand scale, which is the … let’s call it the ‘buy and sell’ dictators. So through automated strategies, we can buy when the time is right and sell when the time is right to optimize returns for the users, ”he said.
Upcoming vaults designed to programmatically play the rebase games are designed to do just that, but given the unfamiliar game theoretical landscape, it’s impossible to say whether the vaults will be enough to stabilize DIGG – or what happens after the vault incentives dry up.
Finally, after weeks of anticipation, instead of “Wen DIGG?” BadgerDAO participants queuing to take a spin at the latest rebase casino should now ask themselves, “What’s next?”