After weeks of anticipation and a closely-watched series of preparatory steps, BadgerDAO’s synthetic rebasing Bitcoin, DIGG, is now live and claimable for qualified addresses on Ethereum mainnet.
The release will be eagerly welcomed by a perhaps-overzealous community, one which has been lighting up Twitter with “wen DIGG” for weeks. For all the memes and excitement, however, there’s some serious technical heft behind both the distribution and the maintenance of the newest Bitcoin asset on Ethereum.
In order to prevent an overallocation to deep-pocketed “whales,” however, the DAO approved an application of a 1.75 root to smooth the distribution between addresses. As Tompkins wrote in the original DIGG distribution proposal, this root means that, while in a linear distribution the top 100 addresses would have been eligible to receive over 70% of DIGG, they instead will be able to claim just 33%.
Tompkins said that of the 600 DIGG tokens currently available the top address will receive 8.75 DIGG, while the average of the 8517 eligible addresses will be able to claim .07 of a token.
The goal of this distribution was to allow the project to “reward the little guys that are strong badger supporters but not fully disadvantage the whales,” said Tompkins.
Algorithmic stablecoins have been a hot topic in DeFi circles over the past few months as one of the most popular trading vehicles. The assets, which are primarily meant to track the price of the US dollar, have “rebasing” features that dynamically expand or contract the total supply of the asset based on preset parameters such as price or time.
So far, however, they’ve proven to be far more effective at enriching users who know how to play the rebase parameters than they’ve been at creating truly stable assets.
While there has been speculation as to how DIGG will perform and what the best strategies might be, it’s ultimately unclear to what degree the asset will be able to hew to its intended peg given BTC’s volatility and DIGG’s unique launch.
Forthcoming vaults designed to programmatically play the rebase games are designed to do just that, but given the uncharted game-theoretical landscape it’s impossible to say if the vaults will be sufficient to stabilize DIGG — or what happens after vault incentives dry up.
In the end, after weeks of anticipation, instead of “Wen DIGG?” BadgerDAO participants lining up to take a spin at the latest rebase casino now must ask themselves, “What’s next?”