DIGG, the synthetic „Bitcoin“ with BadgerDAO’s rebase function, is now active.
24. Januar 2021
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After weeks of waiting and a series of closely followed preparatory steps, the synthetic Bitcoin with BadgerDAO rebase function, DIGG, is now active and can be claimed by qualified addresses on the Ethereum mainnet.
Active users in the DeFi ecosystem can now claim Stake DAO tokens.
The launch will be greeted with enthusiasm by a perhaps overzealous community, which has been lighting up Twitter with „Wen DIGG?“ (when will DIGG come out?) for weeks now. However, despite all the memes and excitement, there is a lot of technical weight behind distributing and maintaining the newest „Bitcoin“ asset on Ethereum.
Ultimately, now that DIGG is free in the wild market, forces are what will determine the long-term success of the synthetic Bitcoin Loophole asset, a success that may not be assured.
Launching fair and flat
According to Jon Tompkins, BadgerDAO senior contributor and distribution architect, the amount of DIGG claimable for each eligible account was determined by a formula centered on the activity of an Ethereum address in the BadgerDAO app. Factors such as total platform-native Badger tokens earned, Badger ratio earned per Badger staking and total days blocked were taken into account.
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However, to avoid over-allocation to „whales“ with deep pockets, the DAO approved an application of a root of 1.75 to smooth the distribution among addresses. As Tompkins wrote in the original DIGG distribution proposal, this root means that while in a linear distribution to the top 100 addresses they would have been eligible to receive more than 70% of DIGG, instead they will be able to claim only 33%.
Tompkins said that of the 600 DIGG tokens currently available, the top address will receive 8.75 DIGGs, while the average of the 8517 eligible addresses will be able to claim .07 of a token.
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The goal of this distribution was to allow the project to „reward the little guys who are strong Badger supporters, but without completely disadvantaging the whales,“ Tompkins said.
Now that the token is active, the rebasing games begin.
Algorithmic stablecoins have been a much-talked-about topic in DeFi circles over the past few months as one of the most popular trading vehicles. The assets, which are primarily intended to track the price of the U.S. dollar, have a „rebasing“ feature that dynamically expands or contracts the asset’s total supply based on preset parameters such as price or time.
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However, so far they have proven to be much more effective at enriching users who know how to play with rebasing parameters than at creating truly stable assets.
DIGG will possibly be the first synthetic Bitcoin with rebasing functionality in history, and certainly the first to feature this distribution method. Users will be able to stake their DIGG in a performing vault, use it to provide liquidity to DIGG/WBTC pairs on Sushiswap and Uniswap, hold the primary asset in anticipation of a positive rebase occurring, or sell the tokens in the market.
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While there has been speculation about DIGG’s performance and what the best strategies might be, it is ultimately unclear how far the asset will be able to maintain its parity, given BTC’s price volatility and DIGG’s peculiar launch.
However, in a previous 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 vault system is really large-scale the … let’s call it the ‚buy and sell‘ dictators. Then, through automated strategies, we can buy when the time is right and sell at the right time to optimize profits for users,“ he said.
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Upcoming vaults designed to programmatically play rebase games are designed to do just that, but given the unexplored landscape of game theory, it’s impossible to say whether the vaults will be enough to stabilize DIGG, or what will happen after q