Badger Setts Bar High with Creative Approach to DeFi
The rapid growth of the DeFi space has been described as being as disruptive to traditional finance as the Internet was to information sharing. While DeFi may still be considered by some a niche market in crypto, the space has grown by a whopping 1500% to $8 billion according to DeFi pulse. With pseudonymous and well-known developers alike flocking to the space in droves, and continuously more prominent projects aligning under the Yearn Finance umbrella, one could argue that it is becoming increasingly challenging to stand out in DeFi.
The difficulty of making a lasting impact is so apparent that even most airdrops, or crypto giveaways, are looked upon by DeFi pros with harsh skepticism. Understandably so, when DeFi degens pump and dump these projects into the dirt almost as fast as they launch. What is arguably one of the most effective airdrops in DeFi history, the 400 Uniswap token airdrop that was listed next to Yearn Finance’s launch as one of the defining crypto moments of 2020, only briefly brought UNI to $8 before it fell to the $2-$3 level.
One of the greatest challenges of airdrop-driven DeFi marketing strategies is incentivizing users to hold their crypto, which they usually didn’t work for, without selling it for quick cash or trading it for a token they have actual faith in. In other words, the difficulty lies in getting the new users to stay.
Badger DAO’s Strategic Airdrop
Enter Badger DAO with what DeFi history may one day describe as one of the most brilliantly executed airdrops in industry history. Rather than reward users simply for interacting with Badger, like Uniswap’s strategy, development determined airdrop reward allocation based on specific actions taken by users in the DeFi ecosystem. Examples included participating in governance decisions with either Yearn Finance or SushiSwap governance, donating to Gitcoin and minting wBTC (wrapped Bitcoin, useful for some DeFi mining strategies).
The brilliance of the airdrop was twofold. First, by allocating airdrop rewards based on specific actions users had to take in the DeFi community, development was ensuring that only the most active DeFi participants would receive the most rewards, thereby mitigating the potential of a pump and dump. Second, by rewarding participants in other communities and for actions done out of benefit to DeFi, like donating to Gitcoin, Badger was making a gesture of goodwill itself to other DeFi entities.
Many individuals still stuck scratching their heads over the non-traditional ‘merger’ of companies like Cover Protocol, Pickle Finance and SushiSwap under the Yearn Finance hierarchy may wonder how developers representing separate DeFi protocols don’t end up locked in heated competition. The answer is the DeFi ecosystem intends to take traditional finance to a higher level; one that promotes cooperation amongst DeFi participants so that everyone can be a winner.
Liquidity Mining with Badger
Badger brings a new attitude to liquidity mining, or staking your crypto for rewards, through various smart contracts, including a variety of options for DeFi enthusiasts. In case you’re still wondering why the headline of this article was spelled wrong, the answer is that ‘Setts’ are the name for Badger DAO’s version of Yearn’s vaults. A ‘sett’ in the wild is where badgers make their home, and with APYs in the range of 600 – 900%, liquidity miners will feel right at home staking on Badger DAO.
Badger caters to the Bitcoin bull with multiple BTC Setts, including for wBTC, renBTC and even a ‘Super Sett’ where you can earn FARM tokens (Harvest Finance). Badger DAO also offers a vault specifically for staking Badger. Offering a combined 643% APY currently, the latter option also served as a convenient option for Badger airdrop token recipients to immediately stake their airdrop for additional rewards.
While Badger’s token staking vault does draw some comparisons to Harvest Finance’s auto-compounding FARM staking vault, Badger’s approach is arguably better. While still accumulating a percentage of rewards from all the Badger Setts, the Badger staking vault instead distributes only about half of the rewards back to the underlying LP (liquidity provider) position for auto-compounding. The rest it distributes as claimable rewards, meaning you have to pay gas fees in Ethereum (ETH) to claim. Harvest simply auto-compounds the entirety of your stake, meaning you only have to pay gas when you claim the whole deposit. All your rewards auto-compound, meaning you arguably earn more efficient yield. One might consider this a design flaw, but herein lies the brilliance and balance of Badger’s system.
Over time, your stake will earn a multiplier for remaining in the Sett. This means that the longer your Badger or other LP position is staked, the better the return will be for your deposit. Rather than having to decide whether to claim the entirety of your rewards and reset that multiplier or risk taking no profits, you can simply claim a portion of your rewards without unstaking. This also gives you the flexibility of deciding whether you want to just claim some rewards, such as for trading, or put them all directly back into the Badger Sett to begin earning multipliers on the newly deposited portion.
When you think about the purpose of the Badger staking system and how it impacts liquidity providers (LPs) in how they make their staking vs unstaking, buying vs selling decisions, it’s no wonder how quickly Badger’s governance token has risen in value.
Badger Community
In addition to establishing a respectable and potentially industry-disrupting protocol in relatively little time, Badger DAO has also quickly amassed a strong community surrounding the project. While Badger did launch with a somewhat buggy UI, the development team was quick to address the problem. The community was equally expedient in coming together to take on different roles in the Badger ecosystem, from moderating the Badger Discord and forum, to suggesting UI and design improvements. Badger DAO also prioritized the launch of their first governance vote, indicating their willingness to be community-driven, much in-line with the ethos of other respected DeFi protocols.
Badger has also incentivized community growth and development through various initiatives promoted on their Twitter page. One of their finest examples of promoting development in the DeFi community is an allocation of 2% of $BADGER token supply to Gitcoin, a platform where crypto developers may receive grant funding for projects.
Badger’s focus on community development as a core principle of its yet unwritten mission statement does support the credibility of the project and the integrity of its vision.
Badger Security
Besides rewards distribution and Gitcoin allocation, one of Badger’s first priorities in the realm of security was the completion of numerous security audits. Badger’s treasury has already been leveraged in paying for the first completed security audit by Zokyo, as outlined in this LinkedIn post. Additionally, Badger plans to allocate a percentage of the treasury to ongoing security measures and audits as outlined in this forum post on the next two months for Badger DAO.
Badger’s Future
In conclusion, there is much to be excited about regarding the future of Badger DAO. Aside of speculating on token price, there are many ways to be a part of the community and support Badger’s continued growth. Ultimately, Badger will only be as strong as its community.
If you found this article informative and Badger potentially interesting, check out their website or connect your wallet to see current rates. Most importantly, engage the community through the Telegram, Discord or Forum to discover why others are proud to call themselves Badgers!
Do your own research. Not financial advice. Make responsible decisions and be the future you want to see in DeFi.
-DeFi Fry