DeFi Update | Week #8, 2021
This was another busy week for DeFi, with the market experiencing a lot of volatility and BadgerDAO showing its CLAWS. Alpha Homora and Cream dealt with the aftermath of the recent exploit. Brave revealed its plans to integrate a DEX in a move reminiscent of Metamask introducing swaps. Also, tokenization of real world assets may be a bit closer, with Centrifuge announcing a $4.3M raise.
BadgerDAO has announced a new product CLAWS, in a move that may further catalyze the growth of the project, which is already in the top 10 by TVL.
Badger DAO is a project focused on increasing engagement and utility of BTC in the Ethereum DeFi ecosystem. The project appeared in September of 2020 and quickly gained popularity and traction, as it capitalized on key trends in the market.
DeFi gained a lot of traction in 2020. Big part of this wave of success was due to the lucrative nature of yield farming. In parallel, 2020 saw an immense flow of BTC to Ethereum in the form of various wrapped tokens.
The first two products introduced by Badger were Sett and Digg. Sett can be thought of similarly to a Yearn vault, it’s a relatively common concept soon a lot in the space. In these Setts users can stake their tokens, or the liquidity pool tokens from either Sushi Swap or Uniswap. In return they earn rewards.
The other product is called Digg, a rebase synthetic asset pegged to BTC. Digg fitted in with the end of 2020 beginning of 2021 trend for rebase stable assets. However, many of those assets struggled to keep their peg. Moreover, it remains a question whether or not there is real organic demand for Digg in a DeFi environment with a growing supply of wrapped BTC.
BadgerDAO and Yearn
On the other hand, the demand for yield products for BTC assets seems to be there. Recently, Badger DAO partnered with Yearn, which should further help with growth and adoption. Yearn appears to try to assemble specialist projects to focus on developing particular aspects or features. In that sense the partnership makes a lot of sense.
While the Sett product may have been inspired by Yearn, Badger seems to have learned a lot from UMA. The Badger Developer Program bears some similarities to UMA’s developer mining initiative, and the new CLAWS product appears to be an evolution of UMA’s yield dollar concept.
CLAWS’ yield dollars differ from stable coins in that these collateralized assets have an expiration date at which point their value reaches $1. This in turn creates a lot of interesting use cases.
Since Badger is now part of the Yearn ecosystem it makes sense for it to take advantage of all of the projects involved. The yield rewards for CLAWS on SushiSwaps will create a tiered system of rewards for those utilizing CLAWS and the BadgerDAO ecosystem.
Interestingly, of the projects involved in the Yearn ecosystem, Badger has the second highest TVL, behind SushiSwap. It should be noted that a great deal of that could be attributed to the rise in price of BTC. The project’s 90-day aTVL of around 486M is significantly lower than its TVL of around $1.44B. However, with the Badger community growing, the project demands attention of the DeFi community.
The information provided here is for informational purposes only. This is not investment advice and should not be treated as such. Strategic Round Capital and/or the author of this article holds a position in BTC, ETH, YFI.