DIGG implementation proposal

Hi! BadgerDAO is a great project and the DIGG token is certainly very interesting. But what I think is that elastic supply alone is perhaps not enough to keep DIGG’s price anchored to BTC’s. In times / days of high BTC volatility, DIGG risks always being left behind with the price update.

I would like to propose my idea, that if it were possible to implement it, it could help the DIGG token to remain anchored to the price of BTC or at least update itself more quickly to changes in prices.

My idea is based on arbitrage between DIGG and WBTC! WBTC has the ability to almost perfectly follow the trend of BTC, so if BTC goes down quickly, WBTC will also follow it while DIGG will probably have to wait for the rebase and then people will sell DIGG, everything must be done without buying pressure ( some whales could manipulate the system). This is why I was thinking of giving WBTC holders the possibility of arbitrating the price with DIGG.

How?

Giving the possibility to WBTC holders to swap “n” WBTC with the same quantity “n” in DIGG when the price of DIGG is greater than WBTC. This will lead WBTC holders to change to DIGG and then sell to return to WBTC for a profit. On the contrary, if the price of DIGG is lower than WBTC, the holders of “n” WTBC could be given the possibility to swap for “n” + the percentage of difference between DIGG and WBTC + an incentive. So also in this case the holders of WBTC will be incentivized to swap in DIGG, that is to buy them by raising the price. Then, when the arbitrageurs sell to return to WBTC, the price should still hold up as the supply should already be adequately adapted in addition to the fact that there will certainly be a lot of buying pressure in this case, given the possibility of buying BTC at a lower price. Now…

How to find a way to ensure that despite the higher or lower price of DIGG compared to WBTC it is possible to incentivize the swap to arbitrage as explained above?

I think a common DIGG liquidity pool could be established. Whoever provides liquidity to this pool, keeps the token alive and will be rewarded with the swap fees made by the WBTC holders to referee that will end up directly in the pool! There will certainly be many arbitrage opportunities and therefore many fees to be shared all while safely keeping your tokens!

Mine is an idea that came to me so quickly! I don’t know if that’s a good idea or just bullshit! I don’t know if it’s feasible or not! but I hope it has been helpful in inspiring you on the team!
Let me know what you think about it!

Thanks,
LVE_17

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