DIGG is as volatile of a ‘currency’ as Badger. 1 DIGG is targeted to be worth 1 BTC, but it doesn’t mean that you will keep owning 1 DIGG.
DIGG value proposition is at targeting BTC price, that is correct. But what if it fails to do so?
Having DIGG value backed by Badger value is a good thing for DIGG.
At least for the early stage, when its value is not set in stone and we have not rolled out more advanced price stabilizing methods.
Having a rebasing token that exists on its own overall is an inferior model to the model where rebasing token is backed by another value-producing asset.
If you could get 600% APY for mining Badger and 400% for mining DIGG would you still mine DIGG to get the rewards?
It is less of a structural question and more of a balancing act, in my opinion.
And the most reliable way to balance is by having 50/50 Badger/DIGG rewards ratios.
Otherwise if Badger’s price decreases, people will have a financial incentive to exchange it for DIGG to mine DIGG Setts for better APYs, thus decreasing the Badger’s price even further.
Having 100% DIGG rewards for DIGG Setts and 75/25 Badger/DIGG ratio for Badger Setts presents an extremely problematic situation for Badger token holders.
Following the logic you’ve presented above, if people think that 1 DIGG is 1 Bitcoin (and more), and Badger is a token with no real value, why would they prefer to mine the Badger Setts over DIGG Setts?
Continuing my previous thoughts from before, there is an easy way to solve for the difference in the APYs - the 50/50 split in ratios.
An alternative way would be to further cut the emissions of DIGG.
Having Badger focused rewards for Curve BTC Setts is also not necessarily a good thing for Badger holders.
BTC Sett miners are more likely to farm & dump - while, for example, Badger stakers are more likely to stake & restake.