Hello BadgerDAO community,
We at BA Labs are excited to participate as risk management contributors for Badger’s upcoming eBTC protocol! We wanted to take the opportunity to introduce ourselves, share more about our background, and touch on some focus areas we’ll be prioritizing to support eBTC.
We have deep experience with parameter management and stablecoin monetary policy through our contributions at MakerDAO, including long term engagement as the Maker risk service provider and participation in the former DAI monetary policy committee (MOMC). We will provide guidance to the BadgerDAO for managing key eBTC monetary policy levers including protocol yield share and redemptions parameters. Along with Steakhouse, we will also be founding members of the initial eBTC asset liability committee (ALCO) to drive monetary policy and stability for eBTC.
Protocol directed liquidity and surplus funds will play a key role in driving utility and stability for eBTC’s launch. We’ll provide analysis and strategic recommendations for managing the protocol’s assets to ensure adequate liquidity for both user experience and risk management purposes. As usage and circulating supply of eBTC scale up further, we will also assess liquidity requirements and provide guidance on the most efficient way to meet these needs, either via additional protocol owned assets or targeted incentives. Concurrently, a framework for using protocol reserves to actively support the eBTC peg through arbitrage trading will drive improved stability and market confidence while providing profit opportunities for the protocol reserves.
BA Labs has provided highly used dashboards across top lending and stablecoin protocols including Maker, Aave, Compound, Spark, and Ajna. We are currently developing a dashboard for eBTC to show key protocol metrics including the following:
- Aggregate data across all CDPs: total debt, total collateral, total collateral ratio of the protocol overall (TCR) and comparison to recovery mode, distribution of debt by CDPs’ individual collateral ratio (ICR) and corresponding liquidations curve
- Individual CDP data: ICR, collateral and debt amounts, protection score rating (modeled likelihood of CDP being liquidated based on user behavior), debt in front (at lower ICR) for redemptions, and historical CDP activity including eBTC mints/burns as well as collateral deposits/withdrawals
- Current system parameters: redemption fee floor, alpha, and decay, recovery mode status, flash loan fee, and protocol yield share
- Oracles: primary and backup oracle status, current price, and historical data
- Liquidations: historical breakdown of liquidations over time with price and performance data, broken down by borrower and liquidator
- User acquisition: analysis of CDP user migration from other defi protocols
The eBTC dashboard will be a core tool for surfacing risk metrics, demonstrating the utility of eBTC and CDP products, and communicating the protocol’s growth story to the wider public. Over time we plan to provide additional information beyond CDP focused data, including eBTC price and liquidity metrics, protocol revenue, and asset allocation across future minting mechanisms.
As the protocol matures after launch, Badger will be able to shift focus from stabilization to rapidly scaling eBTC. Some of the top priorities we envision include a staked version of eBTC to share protocol revenues with holders and drive growth, and deploying additional minters to deepen eBTC liquidity and utility, including a potential Bitcoin stability module (BSM, functionally similar to PSMs used by other decentralized stablecoins) or algorithmic market operation (AMO) module. Sound risk analysis will ensure that these and other growth initiatives get off on the right foot.
We look forward to working collaboratively with Badger core contributors, Steakhouse, and the broader community to grow the protocol and position eBTC as the canonical tokenized Bitcoin on Ethereum!