Idea to get wBTC 1:1 DIGG LP liquidity before the Airdrop

General Discussion
1

I was having some discussion in discord about the DIGG Airdrop and an idea came up regarding how to handle the 1:1 DIGG:wBTC LP support out of the gate.

The idea is as follows:

Offer the DIGG airdrop wallets the following:

A DIGG Air-drop bonus beyond the normal 1x IF they qualify and precommit to the following:

To deposit some minimum amount of wBTC to be paired 1:1 with their DIGG airdrop into either the UNI or Sushiswap LP (the bonus rewards for this action will be equally split between UNI/SUSHI).

THe idea would be to take part of the Treasury DIGG in this airdrop and offer a bonus that is preferentially offered to people who:

  1. Held all Badger
  2. Added value and purchased Badger
  3. Never sold 1 Badger or below their initial stake (or increased their LP stakes as time went on)
  4. Have the most accumulated stake days (not necessarily points)
  5. Have a minimum wBTC to add (.1wBTC?)
  6. Bonus goes up to a maximum wBTC depending on coverage.
  7. The sett reward multipler set to maximum via staking days out of the gate ?? (doable or no)

The point here is that we are going to have 600 DIGG coming out on this initial Air-drop and it would be ideal if we could find at least 100wBTC to pair with 100DIGG 1:1 to provide liquidity on UNI and Sushiswap out of the gate.

We can have people who have wBTC and are expecting to get a DIGG airdrop sign a transaction (just like doing the vote) of their intention to be ready to deposit at least .1wBTC into a contract that then would be used to pair with their DIGG airdrop 1:1 for uniswap LP or sushiswap LP before anyone else gets DIGG.

This way we pre-prime the LPs by offering both a extra DIGG air-drop bonus before the markets get this. We can also offer these people either an bonus DIGG air-drop of rewards later or a bonus on rewards. This could even be signaled by dropping a NFT for these wallets to be the thing that gives them the addtional bonus.

The details I want to leave completely open. The goal is to allow the most committed Badger supporters who took on the most risk early the ability to get an additional DIGG air-drop bonus by allowing them to bring in more wBTC liqudity into the protocol and helping stabilize the DIGG:wBTC PEG with liquidity before the DIGG air-drop happens.

What the bonus is, who to offer it to, how it is spread out between people who want to contribute, or the rest of the details should be up to the community. Given this air-drop is coming quickly I think prudence says we should at least try to give the community itself a way to provide wBTC liquidity for DIGG.

The bonus that is offered can simply be distributed to everyone so we don’t necessarily limit the amount of wBTC available for this as there is more wBTC available than DIGG. If done right we might find what 200 wBTC+ ready to pair with DIGG before the air-drop even happens covering the Air dropped DIGG almost 1:1

What I am suggesting is that we take a piece of the Treasury side here to offer up as a DIGG bonus for people who will pair wBTC 1:1 with their DIGG. How much up for discussion. The bonus could also ‘vest’ for later btw for people who don’t sell DIGG and only accumulate rewards further reducing sell pressure on DIGG and encouraging people to get in (increasing the probability the DIGG:wBTC ratio goes above one allowing the treasury to build a wBTC stash to manage the DIGG:wBTC PEG)

Details to be discussed by the community.

4 Likes
2

I think your write up is well thought out and I appreciate the work you put into this. That being said, I would not support a decision like this for 2 reasons.

  1. I still don’t feel we’re ready to start using the treasury for anything. While it may feel that this project is getting established, its still quite new and I don’t believe that the community is cohesive enough at this point to be making quick decisions regarding the treasury.

  2. Perhaps I’m overestimating here…but I think you’re underestimating the amount of liquidity that people are going to assign to Digg with the current set up. I’m thinking Badger’s TVL will approach or breach $1b within a week of Digg’s launch.

While I’m in a position to benefit substantially by your idea, just don’t think we’re ready. Cheers!

1 Like
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I have heard this one before (Maker) and now many months later the DAO is having to shoehorn in surplus withdraws via MIP to pay people. Fortunately 1Hive uses consensus voting which alleviates this but creates other issues regarding quality assurance for work done vs. paying up front for it.
Hence I believe this argument is just fear based and will have to be overcome anyway. Rip the bandaid off now because it is going to hurt more later.

Here is what I do know. That unless someone gets access to DIGG AND wBTC AND puts up liquidity there will be none to start with (by definition can’t be unless the treasury steps up pre-release and they’d have to use either funds or sell badger). Personally I think it is better if we get the community in the pre-release phase via an incentive to put up wBTC to pair with DIGG. We get a few bonuses here:

  1. Less DIGG selling
  2. A huge boost in liquidity before the formal DIGG air-drop
  3. A higher probability that DIGG: wBTC ratio increases allowing the treasury to be ready to sell DIGG for wBTC at above PEG so when the DIGG price drops they will have wBTC to support the ratio.

I avoided details on this because there are a lot of options to encourage this (one way is to adjust the ratio or the airdrop) so that people signing up to back their DIGG with wBTC get a higher ratio on the airdrop, giving them a bonus relative to others that don’t qualify or can’t/won’t commit to backing.

The whole point here is to try to avoid the ratio drop due to lack of LP liquidity on release and no-one willing to take on providing initial liquidity into the LP at 1:1 which is what we want. The above proposal idea completely settles this issue vs. leaving it up to markets to decide and having people getting whipsawed around both in the LP and with DIGG. A high participation means the DIGG:wBTC ratio probably won’t move around much because most of the DIGG will be pre-paired with wBTC at 1:1 and the rest selling or buying won’t drive the price around. Now if people want to get into the sett (net DIGG buying) it will mean the DIGG price increases which is good for the DIGG treasury, and good for DIGG holders, as well as DIGG rewards.

There are many ways to incentivize this I think taking maybe 50-100 DIGG to improve the chances of a DIGG launch and ratio to wBTC increasing nearer to 100% is well worth the DIGG and at 4000 total DIGG available is a small price to pay. Also realize this could be as low as 40 DIGG (20 for UNI and 20 for sushi) and still be worth it.

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Maker is not comparable to Badger. Or any project, really.

It’s been around for a long time and is very heavily VC backed. It is also IMO the singular most important project in DeFi, it started the whole party.

Maker has also suffered from one of the largest fud campaigns in this space and that is partly responsible for the seeming lack of governance involvement, although, any time I’ve logged in over the years…it’s seemed pretty robust to me.

The reason I think it’s too early to use the treasury…is because we don’t yet have a long term community plan. If we start issuing funds for every little one off proposal, we’ll completely fuck ourselves. It will open a floodgate that can’t be plugged.
Once we have a plan, like, use 30% of the treasury for this, this, this, and that over the next 2 months…then I’m all in for treasury go Brrrr.

Hope this helps to clarify my thoughts on this.

Edit: the treasury is committed to supplying some wBTC initially for Digg, not sure of the amount though.