Anonymous analyst “Wezek Bruh” published the main reasons why BadgerDAO and its native token linked to Bitcoin, DIGG, could be a great opportunity for investors. Created as a rebase token, DIGG has the capacity to contract or expand its offering to meet a price target, as Wezek Bruh explained.
The analyst believes there is value in DIGG as a potential speculative investment and as a “critical part of the Badger ecosystem.” DIGG holders have a fixed percentage of the token’s total market capitalization. While price is determined by market dynamics, the number of DIGGs an investor has, within a wallet or smart contract, can depend on.
This is determined by the positive or negative rebase, but as the analyst explained, this mechanism is designed so that the investor “always keeps your slice of the pie”. Wezek Bruh added:
Most importantly, you should think about your DIGG position in terms of percentage ownership of the total market cap rather than the number of tokens multiplied by the price per token.
DIGG holders can stake their tokens in a badger vault and receive rewards with the token bDIGG. Currently there is an APY of 43% with this product. Unlike DIGG, bDIGG is not subject to the rebase mechanism. The analyst said the following about BadgerDAO and one of its Bitcoin-based investment strategies:
(…) You can buy DIGG that doesn’t track the price of BTC perfectly, wager it in Badger to earn 43% APY, and you can also get bDIGG tokens back in your wallet that you can use in other places within DeFi.
The analyst emphasizes that BadgerDAO provides its users with incentives that will benefit holders as well as the protocol. Therefore, the latter can build a sustainable model.
How DIGG can be a hedge against Bitcoin’s fluctuations
As Wezek Bruh further explained, DIGGs are again based on a 10 day period. The mechanism responds to the price fluctuations of BTC. Therefore, DIGG takes longer to respond to a crash or bull run. This window can be used in more investment strategies.
Since the token tracks the price performance of BTC, DIGG can be considered a synthetic version of Bitcoin. An “impure”, as the analyst claimed. However, BadgerDAO aims to integrate BTC with the DeFi sector. Wezek Bruh added:
Badger is fully focused on bringing BTC to DeFi. And with DIGG, it is one of the few places to offer revenue in BTC. Ultimately, I prefer BTC to “fill in the blank”, last token of the week.
Unlike other synthetic versions of BTC operating in the DeFi sector, such as Wrapped Bitcoin (WBTC), DIGG removes a risk factor by not requiring users to provide collateral. The analyst believes this protocol can achieve the ‘holy grail of crypto’ by combining BTC’s function as a store of value with the ‘long-term’ utility found in the DeFi and Ethereum ecosystem. Wezek Bruh said:
The mechanics around DIGG may be different, but the utility remains as DIGG owners get BTC in-direct exposure to Ethereum to earn interest (bDIGG, ibBTC), borrow against their positions and (especially) as a compoundable asset in DeFi do much more!
Bitcoin is trading at $ 57,043 rallying 7.6% on the daily chart. In the weekly and monthly chart, BTC has a gain of 9.7% and a loss of 2.8% respectively.