BIP 26. Badger/DIGG Emission Plan Part III: Liquidity Mining Program Extension.

Category: Emissions

Scope: Basic parameters for Badger + DIGG distribution.

Status: Accepted.


  • Gradual weekly emission reduction
  • Liquidity Mining Program extends to 22 weeks after the DIGG launch
  • Most of the rewards are issued in DIGG
  • More rewards are distributed if Badger and DIGG grow together.


So far, the Badger DAO has issued more than 20% of Badger’s total supply during the first seven weeks of the liquidity mining program. This rate can’t last for long.

Extending the program with gradual emission reduction will allow us to arrive at a sustainable emission rate while avoiding a steep drop in the total value locked. We will also end up distributing more rewards to long term supporters who stay with Badger when the APYs get lower.

BIP 26 outlines the plan that will allow us to extend the liquidity mining program to 22 weeks after the DIGG launch.

We have around 2.9% of Badger supply and 40% of DIGG supply available from the liquidity mining allocations. To continue distributing Badger, we need to issue less Badger and more DIGG each week than what was suggested in BIP 21.

I suggest the following adjustments to the BIP 21 parameters:

  1. Changing the Badger/DIGG ratios:
  • for Badger Setts from 59/41 to 33/67;
  • for DIGG Setts from 17/83 to 0/100.
  1. Keeping equal rewards for Badger and DIGG Setts for the PEG allocation as in BIP 22, plus:
  • Badger Setts will keep all the excess DIGG without being affected by the PEG distribution changes.
  • Max DIGG threshold parameter in the DIGG PEG model will change from 80% to 70%. This will allow for the same value distribution for Badger Setts when DIGG is at 80% of BTC price as in BIP 22.
  1. Starting Badger issuance at 184,453 Badger and DIGG issuance at 4.28% supply in the first week.

  2. Decreasing emissions at a rate that ranges from 10% to 7.5%. So towards the end of the program, the weekly reduction in emissions will be lower than at the beginning.

The total amount of Badger required for the extension plan is 1,746,971. We have around 600k Badger left in the liquidity program allocation, and I suggest covering the rest from the Unclaimed Airdrop fund. These adjustments will allow the program to run for 22 weeks.

The % of DIGG supply distributed during the program will depend on the DIGG/Badger price and supply ratio:

  • If DIGG outgrows Badger past a certain threshold, we save on DIGG emissions next week by using the Dynamic Emissions Model from BIP 21.

  • If Badger outgrows DIGG or both grow at the same rate, we distribute the maximum amount of DIGG that’s been allocated for the following week.

This way, the amount of dollar value that is being distributed through DIGG gets capped at the value which is supported by the Badger price.


If you’d like to get fully acquainted with the distribution mechanics, here’s the sheet to copy. You can choose the week you’re interested in and fill it with various numbers for Badger Price, DIGG price, and DIGG supply.

I. Weekly Emission Reduction Schedule.

BIP 21 introduced the dual token emission model where our main benchmark for value distribution is set at 2.9% of Badger supply, similar to what the DAO has been distributing so far on the weekly basis.
Here we use the same benchmark, but the rate of Badger emissions is fixed and the DIGG emission rate is dynamic but capped according to the following schedule:

100% of Badger emissions stand for 603,752 Badger. 100% of DIGG Cap means 5% of DIGG Supply. 138.18% of Total emissions stand for the value of 834,253 Badger.

II. Adjustments to the Dynamic Emissions Model.

With having considerably fewer Badger emissions available, the original dynamic emission model from BIP 21 requires a change. The adjustment I propose is using Fixed Emissions for Badger and Dynamic Capped Emissions for DIGG.

Fixed Badger Emissions imply that we have a set budget for Badger emissions for the whole duration of the program that is distributed according to the schedule above.

Dynamic Capped DIGG Emissions mean that below a certain ratio of DIGG/Badger market cap we use Fixed Emissions for DIGG distribution. Above that ratio, we use the Dynamic Emissions Model.

To track that ratio in an easier manner we can look at the price of what can be called Genesis DIGG, a.k.a. GDIGG. GDIGG price refers to the value of 1 DIGG from the 4000 that were issued on day 1 of DIGG’s existence. So if DIGG supply grows 2x, GDIGG price will be 2x higher than the DIGG price.

The proposed model is optimized for the GDIGG/Badger ratio of 3800.

In practice, it means the following.

Let’s imagine that we start at $10 Badger and $38,000 DIGG with 4,000 DIGG supply.

If Badger rises from there or Badger and DIGG rise together at the same rate, 100% of the proposed Cap of DIGG emissions gets distributed in the following week.

However, if DIGG grows and Badger doesn’t, the next week’s emissions are capped by the dollar value that’s supported by the Badger price.

For example, let’s assume that during the first week DIGG supply extended from 4000 to 5000 while DIGG and Badger prices ended up staying the same at $38,000 and $10. This would leave us with 154 DIGG to distribute for the second week. However, if Badger’s price rose at the same rate – to $12.5, that would unlock 192 DIGG for the second week of distributions.

DIGG supply that gets saved when the ratio is above 3800 stays in the liquidity mining program fund for future distribution.

III. Adjustments to the PEG Based Rewards.

The initial PEG model was built around equal DIGG emissions for Badger Setts and DIGG Setts, and Badger emissions for Badger Setts would partly cover the downside when DIGG gets below peg.

As we’re changing the ratio of Badger / DIGG emissions from 59/41 to 33/67, it creates excess DIGG emissions for Badger Setts. I suggest keeping those separated from the PEG-based allocation.

Another change is to adjust the max DIGG threshold from 80% to 70%. It means that previously 100% of PEG Based allocation would go towards DIGG Setts when DIGG is at 80% of BTC price, and now it goes at 70%.

These changes will allow keeping a similar level of rewards for Badger Setts when DIGG is at 80% of BTC price as in the original model.

Here’s how a simulation for the original model looks:

And here’s the new model simulation:


To determine the DIGG allocation for the following week I suggest starting with using average Badger and GDIGG prices from the previous week. This process can be further optimized in the future by being automated with shorter time frames.

Do you think we should enact the Liquidity Mining Program Extension Plan?
  • Yes
  • No

0 voters

P.S. I’d like to thank @Spadaboom, @jonto, @mason, and @DeFiFrog for their help with reviewing and improving all three parts of the Badger/DIGG Emission plan.


Voted yes

But remember that the Unclaimed Airdrop Fund contains promised airdrop to those who submitted tickets for missed airdrops, as well as the Gitcoin drop. We must make good on these promises.


Honestly, this is incredibly, incredibly complex and I urge the community to rethink a simpler alternative. The complexity hurts newcomers who are looking to join the community and have a better understanding of the tokenomics. I am all for an extension of emissions, but the complexity is a huge turn off.

It may be beneficial to separate the emission of DIGG and Badger and not base it on the ratio of the performance of both tokens.

In addition, it would be helpful to clearly label the total supply of each token and where the emissions are coming from with pre and post emission pie charts.


Those obligations were taken into account


Second this. The original multiplier/apy was too complex for users to calculate and had to be accepted based on trust. It was just replaced. A similarly complex Digg emission plan will require users to take many aspects of the calculation on trust. That could pose a problem for digg since it is a rebasing token which means we want it to match a particular value based on market incentives which will be too hard to calculate.


Reducing emissions is unfair for small investors

I do not want to think that a whale will arrive, it will put capital in week 1 and in week 12 or earlier it will collect the harvest and go to another place with more profitability.

What if we invest the emissions?

Week 1: 4.5% - 12.5
Week 2: 4.8% - 13.5%

In my opinion, it would be fair that both small and large investors have to stay until the end.


This dynamic emission model is really interesting. I voted for - are there other projects that have done this already? jw how it’s played out.

It’s great how long this will stretch out emissions. I’m going to have to read it over a few times because as others said above it does seem pretty complex. As long as there are good reasons for it and it can be implemented safely then I’m ok with it. One question I have is will this take effect at the same time DIGG is dropped or will Digg be dropped and then we start this emissions at some future time? Because I though DIGG was imminent and we still have to discuss and vote on this.

Also what about those contracts to auto buy and sell digg we discussed some time ago. Are they still happening?

Whales take more risk. I do agree that there should be time-based incentives though.


What will you do when the emissions are over? You clearly said it: collect harvest and go to farm on another place with more profitability. This is short sided view, however if this is what you want, be my guest.

Badger is not yet another farm - because it would not be sustainable long term, not possible because there is a max supply. Badger is growing very quickly and creating several products and use cases with the vision to bring BTC to DeFi.

You have to think longer term that just “farming”. This is a great project, with enormous potential, with a great team and community. I am excited with what is coming. Happy to be part of it as a token holder and happy to increase my holdings by collecting emissions in a longer time horizon.


I understand the stage of this project and that we are constantly evolving. I do support making adjustments, incremental changes, adaptations to the models, to make them more sustainable and better. I agree with the general idea and direction that the project is taking and you have my vote of confidence in what you are doing.

However, it feels like we are not evolving but rather completely changing models every week, making every one much more complex, introducing more moving parts. I would be careful with that. Sometimes complexity is not easy to handle (and implemented in smart contracts - if they are really complex and have a lot of moving parts, risk of having a bug is also increased).

Once this is implemented, this would not be easy to explain in a blog post. Emissions get changed and for Digg, depending on the ratio, we could use either a fixed or a dynamic emissions model. Then, those emissions will be allocated individually as per the Badger Boost formula in BIP 24, but then if you hold an NFT you will get an additional APY, which is unclear how this NFT “boost” will work together with the Badger Boost).

This is well thought out. I would like to see us focus on what real revenue generation model will look like before incentives expire. Optimizing a strong profit share model well in advance of emission expiration will ensure that there is little fallout and perhaps even sustained growth for both Badger and DIGG. Network effect and critical profit mass are building and that should become the major focus sooner rather than later…it is what will sustain the project indefinitely.


@Matterhorn @tj2 @cryptomooniac

All the complexities that were introduced to the emission plan so far have straightforward reasons behind them:

  1. Make Badger benefit from DIGG success
  2. Make DIGG a better product
  3. Extend liquidity mining program

In my mind, the benefits from introducing strong economic incentives in these directions far outweigh the deterring effects they might have on the newcomers. Plus to a large extent, those can be solved by the UI.

Having separate emission schedules wouldn’t support Badger holders.
The current schedule does put a direct financial interest behind Badger staying on par with DIGG.

The fact that APYs might be hard to calculate doesn’t mean that they’re not there or don’t work.

Also, regarding the complexity, I project that it will only increase with time.
In particular, the community seems to be fond of having increased rewards when you lock your liquidity.
Another desirable thing is to receive bonuses for holding NFTs.
Add that to already introduced Badger Boost.

Those are all emission distribution mechanics, so complexities there most likely don’t present existential threats for the money that is held in Badger Setts

We reduce emissions for all investors, not just the small ones. And small investors who hold Badger will on average benefit more from the Badger Boost.

@Oblomov No, it’s a Badger exclusive

@Devin I think there will be emissions on launch, can’t say for sure at which schedule.
The price stabilization Setts are likely to come into play somewhere in the future, but it will take time to develop them.
So far our go-to at price stabilization is the PEG based emissions, which will probably have a strong effect and are easier to implement after launch.
But those too will not be active from launch, it will take a little time to enact them.


Thank you for the clarification.

I agree with the time based incentives. We want as many people as possible involved with this project who may spread the word around, with time based incentives that give people more reason to stay on board. I do feel that this will happen as the use cases for the DAO’s coins grow, however even now we should still be as welcoming as possible.

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Voted for. Thank you for this extremely detailed proposal.

This is brilliant @Mr_Po. I can imagine that we may have to adjust the GDIGG badger ratio as the emissions cap goes down and markets conditions change, but this gives us awesome levers to experiment with and understand. Nice work!!!

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We have to wait a month, and see what happens, and think/talk about how these models effect the economics of the whole system. After we see what happens, @Mr_Po and other economics minded people can write some blog posts. From that some systems guys can write some blog posts that redefine that in a way that blockchain geeks can understand. Then some “tech-translators” like myself can figure out how to write blog posts, which explains it in a way the majority of the Badger community can understand.

When Yearn started, it was with the slogan “Few Understand.” Badger isn’t about the Few, but there are still cool things to do that not many understand.

Rebasing tokens are basically experiments in printing money, and this seems like a really creative and well thought out way of trying to manage all that. Let’s see what happens, work with the levers we have if it makes sense, try something different if it doesn’t.

DeFi is still in its infancy. Now is the time to try crazy shit. If Badger can become a community that ingests that knowledge and spreads it to the many, we will be unstoppable.

This is good stuff. Let’s try it and see what happens :slight_smile:


@Mr_Po This proposal would be strengthend by a few lines stating the effect on the badger holdings of the treasury.

Badger in Treasury:
Total Estimated Cost of Proposal:
% Treasury funds utilised:
Emissions Period/End date of Program:

For many, these stats and the emissions schedule are probably the most significant parts and it provides context.



I don’t think we will see what happens with this BIP in a month, because at the pace we are at, by then we might have two additional BIP further adjusting the model.

Everything in DeFi (including rebasing tokens) is an experiment. However when you do an experiment, you need to be very clear what is the desired outcome, and then work backwards (adjust the model accordingly with what you want to achieve). There will always be unforeseen things and while you cannot possibly think of them all, you need to be very careful and try to consider everything you can.

I do have a lot of confidence in the team and I trust they are doing this very carefully, this is why I am supporting it.

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