Badger leverages stETH as collateral to generate staking yield for both the eBTC protocol and borrowers.<\/p>\n
Badger Finance, a Bitcoin-focused DeFi collective, has launched a 0% interest Bitcoin lending protocol leveraging Lido\u2019s liquid staking token, stETH.<\/p>\n
Badger deployed its eBTC protocol and token on March 26, allowing users to borrow a yield-bearing \u201csynthetic Bitcoin-pegged stablecoin\u201d using Ether as collateral.<\/p>\n
Despite charging 0% interest to borrowers, Badger will generate revenue by staking collateral assets via Lido\u2019s stETH liquid staking token and taking a 50% cut of the rewards. Borrowers will earn the remaining 50% of rewards, rendering eBTC a yield-bearing asset.<\/p>\n
\u201cUnlike conventional DeFi lending protocols that rely on various types of fees to generate revenue, users can deposit Ethereum in various forms as collateral to borrow eBTC at a 0% interest rate \u2014 with no repayment or initiation fees,\u201d Badger said. \u201cWe look forward to enabling and encouraging anyone to build on top of this one-of-a-kind protocol.\u201d<\/p>\n
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The eBTC protocol requires a minimum collateralization of 110%, below which borrowers will be liquidated.<\/p>\n
Lido\u2019s Liquidity Observation lab will provide 15 stETH as additional incentives that will be distributed to early eBTC adopters over a one-month period. The rewards will be airdropped users.<\/p>\n
“The eBTC protocol introduces an exceptional new use case for Lido Staked ETH, leveraging the power of staking rewards to provide a more capital-efficient borrowing option for Bitcoin on Ethereum,\u201d said DeFiYaco, a business development lead at LidoDAO. \u201cLido contributors are happy to support the growing utility for stETH across the DeFi and are looking forward to seeing what eBTC can achieve.”<\/p>\n
Lido is both the leading liquid staking provider and DeFi protocol, currently commanding a TVL of $35.5 billion, according to DeFi Llama. Data from Dune Analytics shows Lido controlling\u00a030.3%<\/a>\u00a0of Ether\u2019s supply.<\/p>\n Badger was once a leading DeFi protocol, pioneering DeFi use cases on Ethereum and topping out at a total value locked (TVL) of $2.32 billion in February 2021, according to DeFi Llama.<\/p>\n However, Badger has since fallen into decline amid growing competition from other protocols and fallout from a\u00a0front-end attack<\/a>\u00a0that resulted in a\u00a0$120 million<\/a>\u00a0loss on Dec. 2, 2021. Badger\u2019s TVL slumped 98% from $1.2 billion at the time of the attack to just $23.3 million today.<\/p>\n <\/p>\nBadger\u2019s fall from prominence<\/h2>\n