“Wen Digg,” another day another meme in DeFi, though this one appears to be headed for the graveyard as Digg, the rebasing crypto asset pegged to Bitcoin, is now live on the Ethereum blockchain.
Last Friday, BadgerDAO, the DeFi protocol which aims to build “products and infrastructure necessary to accelerate Bitcoin as collateral across blockchains,” programmatically distributed 600 Digg. Over 7,898 addresses were airdropped tokens based on a snapshot of the user’s engagement with the BadgerDAO protocol.
The average user received .07 Digg according to BadgerDAO operations team member Ameer Rosic. After three rounds of daily rebasement where the supply of the crypto cryptocurrency increased to bring Digg’s price in line with Bitcoin’s, the .07 average has grown to .1038, or a dollar amount of about $7.5k.
Digg is currently trading at $47.3k, while BTC is at $31.5k, a sign it will need to further increase its supply.
Noteworthy recipients included 0x_b1, the DeFi whale who The Defiant interviewed last week, who received 4.6 Digg based on their actions in the BadgerDAO app.
0x_b1 said they intend to earn more of the token by providing liquidity to the Digg/WBTC pairs, and then staking their liquidity provider (LP) token within BadgerDAO, which earns them Digg via a 22-week liquidity mining program. 0x_b1 also plans to stake Digg directly in the app, which, while the locked token rebases, generates a non-rebasing “bDigg” token, which can then be used across DeFi.
BadgerDAO’s vault has nearly $1B of value locked according to the app’s count.
“Through these vaults we are going to create automated stability strategies where we buy and sell at the right time to best keep the peg,” operation lead Chris Spadafora told The Defiant, adding that BadgerDAO is also introducing liquidity mining rewards based on where the peg of Digg is.
Spadafora thinks the combination of programmatic rebasing and the incentives which BadgerDAO vaults provide will keep Digg’s peg to Bitcoin tight.
As stated, Digg has already undergone three daily rebasings, each of which has entailed an increase in the tokens’ overall supply, because the tokens’ price was above that of Bitcoin. The increases in supply aims to bring the value of a single Digg down in line with Bitcoin.
The rebasing periods happen over a 10-day period, with 10% of the total change in supply happening each day. This means that there will soon be up to 10 rebasements happening at once, as each day brings a new potential change in Digg’s supply.
Spadafora has cited Ampleforth’s rebasing token design as an inspiration for Digg mechanics.
Digg, In a Nutshell
The token is a novel attempt to peg a token to a volatile asset, Bitcoin, by way of rebasing. Digg contrasts with wrapped Bitcoin (WBTC), which constitutes 72% of all tokenized Bitcoin on Ethereum, in that it is algorithmically, at least theoretically, pegged to the price of BTC, and not backed by actual BTC.
Spadafora wants Digg to overcome struggles which the Ampleforth project went through, aiming for BadgerDAO’s vaults to add additional buying and selling levers which can keep the token pegged more closely to Bitcoin.
Rebasing tokens’ fluctuating supply can make their use in DeFi protocols impractical. Digg’s goal is that its non-rebasing token bDigg will be useful as a deposit in other DeFi protocols.
The bDigg token can be redeemed for locked Digg tokens, which will have undergone rebasing, through the BadgerDAO app.
The “launch couldn’t have gone better,” Spadafora told The Defiant, saying “over 90% of all airdropped DIGG have been deposited back in our app either as a solo asset or after providing LP on Sushi or Uniswap and redepositing those.”
As immediate sales following airdrops based on prior use of an app are common, the retention rate is indeed a rarity, suggesting that Digg recipients don’t see their new tokens as “free money,” but rather the chance to be part of BadgerDAO’s future.