If we can somehow prevent whales with different addresses swallowing this all up, I am all for this proposal.
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I donāt this is as big a problem as people think, looking at etherscan i only see 2400 active addresses with little change(not accounting for vaults, bBadger only shows 1000 addresses).
But if it is a concern, Can snapshot be taken with a past time and date? Not sure how that part works.
Suggestions for the airdrop
I skimmed through this and there seems to be a lot of debate over this. I agree that just airdropping onto random people who dump is a bad idea, but it also has value. Here is what I would suggest.
Airdrop 5-15% of digg onto these people:
- Badger staked earning at least a 2.5x multiple (those who staked in pools in the first week or two and held there)
- Community members who brought positive engagement during the first weeks.
- The dudes at APY.Vision, and zapper.fi and all the other portals we want to integrate us.
- Everyone who managed to use harvest before the ui worked well and had to play with decimals and stuff, and still have money in the protocol.
Airdrop some love onto the the community that has proven themselves here for a while, and maybe a small amount to attract some newcomers who seem likely to stay. Give a little to Harvest or a few of the other projects you work with and trust to airdrop or give out as yields.
Iām still trying to understand rebasing tokens, so I canāt be smart about that yet.
Is anyone up to a 2.5 multiplier? I thought that would be in tge 2nd month.
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2.5x may not work, I guess the point is, airdrop to the people who figured out the thing and stayed in, the people who have contributed to the thing and/or leapt to integrate it, the renbtc darknode guys that DeFiFrog feels were a big part of their project and were left out, and maybe other people who are going to stick around. We did a wide airdrop, now letās do a more narrow one to people who will really bring something to the community and stay. Everyone has had a chance to show themselves.
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100% agree with this. We should now focus on building a strong community. Large aidrop were nice, the first one was amazing, the second one (gitcoin) was open everyone. Now, letās reward early users and strong collaborators.
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Iām new to Badger, but this is a very interesting project, and Iām inspired by the thinking on distribution & tokenomics.
To clarify, if a portion of DIGG is allocated to current Sett holders, does this include stakers of the Sett tokens? I donāt want to miss outā¦
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Whoa! 125M is a lot.
A reduction of 1/3 does not sound bad at all. By 1/2 doesnāt sound bad to me at all either.
hereās a thought - instead of DIGG/renBTC how about DIGG/crvrentBTC or DIGG/crvsbtc ? you definitely include more forms of btc then and also create a convenient offramp out of these poolsā¦
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I think the Badger set should get more as those are committed to the project or else it would make more sence to cash out and stake as an LP to get the 35%
LPs should definetly be rewarded the most in my opinion wbtc/Badger and 2nd should definetly be the Badger Set in my opinion the all others.
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I thought that the 3x multiplier for $DiGG was set by the core team already otherwise that something really exciting to add to $Digg i believe.
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Great stuff i really liked the supply reduction points you make at the end and I completely agree.
So in my experience with rebasing tokens (AMPL and YAM), typically the issue with negative rebase spirals is that people sell when they should hodl because theyāre afraid that the value of their wallet will continue to compound negatively between the reduced token quantity and then the resulting spot price drop between rebases. i.e. panic selling. The way negative rebases are supposed to work, at least on paper, is to encourage people to buy to help stabilize the spot price. So one thing Iād caution about is any kind of meta-mechanic that encourages people to sell during negative rebases because I think youāre going to see plenty of unwanted selling behavior regardless.
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Good point!
Staking under the peg would gain a lot from introducing vesting of the staking rewards
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This has slightly less to do with the proposed DIGG launch parameters and more to do with DIGG in general, but Iāve seen several comments mention YAM in regard to rebasing comparisons, so I thought Iād share some of my observations about managing a rebasing token as someone very involved in that project. These are all my own personal opinions and observations and not intended to represent the official stance of the YAM DAO or leadership team.
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First of all, Iām loving how involved and passionate the Badger DAO community is. You guys are doing an excellent job of community engagement, and thatās going to be absolutely critical when DIGG launches, because if you see any kind of market heat or success, your discord and other communication channels are going to flood with latecomers and FOMO buyers who may or may not have caught up on your documentation and medium posts. Trust me when I tell you how easy it is to lose hours of your day responding to questions about why your wallet volume just decreased. Iād encourage the current Badger DAO community to lean in now while itās still the ācalm before the stormā and make sure people know how DIGG is intended to work and what itās intended to do both for users and in the market in general. The more passionate and informed users you have now, the more resources youāll be able to recruit and muster when your existing mod team starts to feel the strain later on.
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Feeding off of #1 above, be prepared to spend a ton of time, energy, and resources educating people about how rebasing mechanics work, how they work for DIGG in particular, and then what those mechanics are supposed to do in theory. That way your DAO is better able to critically consider how to dial-in the token parameters to best align with how you intend DIGG to function. Also, be prepared to reinforce that education constantly. When token parameters change, it can often lead to confusion as different users start to communicate different sets of information to newcomers based on how up-to-date they are on the recent changes. This confusion is easily compounded by rebasing mechanics, in my opinion and observation. Regardless, be prepared from the start to concertedly push out information about DIGG as a community. Do it early and often. To me, this is the best way to mitigate the FUD you will likely see from a market that still primarily thinks in terms of fixed supply ERC20 tokens.
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One thing YAM struggled with is that our token has historically tried to operate as both a governance token and a rebasing token. Additionally, our treasury funding mechanism is also tied into the rebase mechanic, which has been extremely controversial, especially given that rebasing itself is still challenging to understand for many. In practice, this has muddied perception about the token and weāve had to devote a lot of attention to explore the identity and purpose of the token in the aftermath. Itās been a slow and controversial process. I think Badger DAO was smart in keeping governance and rebasing separate from the beginning.
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Another thing Iāve noticed with both AMPL and YAM is that the rebase mechanic in and of itself heavily relies on utility to balance itself and function properly. Remember, weāre talking about programmatic supply changes designed to incentivize psychological market behavior, either through over-supply in the case of a positive rebase or increased scarcity in the case of a negative one. What Iāve observed is that the effect of the over-supply tends to be much more impactful on selling behavior than the effect of the under-supply on buying behavior, and I think thatās primarily due to lack of current market utility. Keep in mind that itās not scarcity that drives value, but scarcity in the context of utility. There has to be a reason to desire a token such that when less of the token is available, users are willing to pay more to acquire it. This is something that AMPL still struggles with in the short-term (although Iām bullish mid-and-long term). With YAM, I was interested to see if our governance utility would be enough to balance the rebase mechanic, and ultimately, I donāt think it was. Negative rebases are meant to increase buying pressure, but what tends to happen for a lot of rebasing tokens at the moment is that speculators hold off on buying until they feel that theyāve timed the bottom. And of course, with a rebasing token, this only leads to longer and deeper supply reductions. This is where Badger DAO has a leg up in my opinion. You launched with a functional product first (your SETTs) and are launching your rebasing product second. Thatās huge. This means that you can very easily give your rebasing token actual market utility by incorporating it into a SETT (or multiple SETTs), and Iām very excited to see how this will impact the rebase mechanic. In my opinion, the more DIGG meaningfully interacts with Badger DAOās product ecosystem, the more it will be able to maintain its peg (or positive rebase stability).
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Create a culture that embraces the negative rebase from the beginning. Itās all about framing. Positive and negative rebases are tools intended to do a job. Iāve observed that most people view negative rebases as a bad thing. Theyāre viewed in the same light as a negative spot price drop - essentially a market signal about the tokenās value. But I donāt think that has to be the case. Positive and negative rebases are a bit like Yin and Yang. If you can frame negative rebases early on as chance for the token supply to correct and consolidate to match current use cases (rather than an indictment on the token itself or the rebase mechanic itself), then I think youāll be doing yourself a favor in the long run.
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Understand that youāre going to get questioned a lot about why DIGG should rebase and not just be a 1:1 pegged stablecoin or a wrapped BTC import. I think your initial documentation about DIGG does a great job explaining your motivations behind this choice, but as a DAO, youāll face the extra challenge that comes with the fact that governance can disregard this motivation if it so chooses. Youāre going to see pushes to peg the token to BTC, not just target the spot price of BTC, and with a DAO, thatās something that is legitimately on the table. Itās up to the community to maintain a culture that can balance both seeing the value in the choices that came before and the needs of the community in the present and future.
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Iāve seen several mentions of Balancer liquidity here in the comments, and I just want to say that this is an avenue that I wish weād explored more with YAM. In our defense, the Balancer Smart Pool Contract hadnāt been released yet when YAM launched, so when it did, we were curious about it, if not optimistic. But one thing that has really been painful for YAM users is impermanent loss in the face of rebasing. If a Balancer pool can help mitigate impermanent loss even just a little bit for DIGG holders, Iād seriously recommend exploring it. Also, if you can get DIGG whitelisted for BAL distributions, then thatās another piece of token utility that will hopefully help balance the mechanics further.
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As far as the vesting schedule thatās proposed, I canāt comment too definitively. One thing Iāll say is that our community voted to establish a 50% 30-day continuous vesting period for YAM migrated from V2 to V3. So 50% available immediately after migrating and 50% fully available after 30 days. Our hope was to prevent people from dumping the minute they migrated. Two unfortunate things resulted. First, the vesting period had no real discernable effect on the spot price of the token. We had several initial positive rebases but rapidly corrected to our target range before dropping into a prolonged negative rebase cycle. This was particularly disheartening for our community who had been riding the highs of the initial yield-farming bubble over the Summer, but it was devastating for users who had to watch the price plummet while 50% of their bag remained illiquid for the remainder of the vesting period. Second, over time, Iāve observed that thereās been some community dissociation from the vesting decision. Thereās been a tendency to view it as something that was imposed from on-high vs something that the DAO decided on and voted on as a community, and with specific reasoning in mind. Obviously, the context of this token release is radically different from the launch of YAMv3, so weāre really talking about Apples and Oranges here. But, if you do vote to vest the initial distribution of DIGG, keep an eye out for shifting user sentiment over time and see if you canāt head it off at the pass to help preserve the Badger communityās sense of unity and cohesion.
Ultimately, based on our most recent governance activity, itās looking very likely that the YAM DAO will be removing the rebasing functionality from our governance token and most likely (but still to be decided and confirmed) exploring the launch of a separate rebasing product under the auspices of our Yam Factory in the future. The results, I believe, will be much more similar to this initial two-token system that Badger DAO will have out-the-gate between Badger and DIGG. So suffice it to say that as someone with an interest in elastic finance and rebasing mechanics, Iām rooting for you all and hope to learn from your process as much as Iāve learned from ours. 
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I think there might be something interesting to explore in applying a bonding curve to the staking reward volume of whatever product youāre using to try to lock up DIGG so that the percentage of rewards increase the more DIGG drops below the target. The hope being that higher APY rates would encourage users to deposit their DIGG rather than transact with it, hopefully creating exponential resistance to precipitous drops.
That said, thatās an entirely meta mechanic that would exist outside the fundamentals inherent to the DIGG token itself. So unless the plan is to indefinitely mint and distribute DIGG rewards in addition to the natural supply fluctuations caused by DIGGās rebase mechanism, itās not a permanent or even long term solution. The alternative of course would be to reward BADGER tokens instead of DIGG, which in that case, introduces the same question of how sustainable that is in the long run and how much does it align with the vision for BADGERās supply. But probably a preferable outside balancing force than adjusting the DIGG rewards themselves.
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Thanks for sharing your experience and thoughts. It was an interesting read.
so that the percentage of rewards increase the more DIGG drops below the target
In my opinion, this type of design creates some perverse incentives for rebasing token holders. If someone wants to own a larger percentage of the network, it becomes more profitable for him/her to keep the price low for the accumulation phase. So it could increase the volatility of the token overall.
I think thereās nothing wrong with continuous distributions towards price stabilizing mechanisms of rebasing tokens.
I view it akin to rewards in proof-of-work and proof-of-stake coins.
āMinersā, who provide valuable work for the token, get rewarded, while the token functions better.
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Thatās certainly a valid concern, and I canāt say that I have an answer for it. In reality, because rebasing is a mechanic designed to influence user behavior on the market, it lacks a certain degree of fine-tuned, verifiable control and agency over the actors it seeks to influence. So itās hard to predict how people will respond to any given variable or element added to the mix. My guess would be that after 5-10 years of watching rebasing tokens do their thing, if we were to chart out the market responses in reference to the rebaserās actions, weād probably see some sort of parabolic curve with the middle representing the percentage of events that resulted in market effects within a predictable range of expectations, complemented by the far ends representing a percentage that just completely defied expectation 
It also just largely depends on the demographic makeup of your community. I can tell you from experience that what works when your token holders are primarily rebasing bulls doesnāt work as well when your token holders come from other interests such as pure speculation, fixed supply accumulators, farmers, etc. Thatās when the whole āaccumulating share of the networkā argument starts to fail, regardless of its validity.
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i like this, the vision of decentralized sexier blockfi
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thank u for taking the time to write this @KW710 !!!
in bullet point 7 you talk about IL in the face of rebases. do u have any links u could share about this more in depth? or point me in the right direction of where to look? iāve been watching from a distance and only dipping my toes into defi so far