Bitcoin DeFi project Badger DAO diversifies its $21 million treasury

Badger DAO is one of the only Bitcoin-focussed DeFi products on the market and is expanding its ambitions.

Forwards for Badger

Badger DAO, the Bitcoin-focused decentralized finance (DeFi) protocol, has diversified a $21 million treasury via its “strategic partners,” the project said this morning. The partners shall help add value to the DAO’s governance along with bringing long-term Bitcoin liquidity.

We're excited to share that we've completed a $21M diversification of the Badger DAO treasury with strategic partners @0x_b1, @polychaincap, @paraficapital & @blockchaincap.

21M Bitcoin 21M Badger 21M Diversification

All the details https://t.co/0AntGBZhnq

Thread pic.twitter.com/Yyu42ilBB0

— ₿adger DAO (@BadgerDAO) March 3, 2021

The move came after the Badger Improvement Proposal (BIP) 37 [Treasury Diversification through Strategic Partnerships] was passed earlier in February. 

Founded last year, Badger brings Bitcoin to DeFi by building out usecases for ‘wrapped BTC’ products. Over $2 billion worth of various cryptocurrencies is locked on Badger, $36 million in annualized profit has been generated, and a treasury of $600 million has been amassed via Badger (a governance token) and DIGG (elastic supply crypto pegged to Bitcoin).

The protocol’s now taking its aspirations a step ahead. As per the announcement, the new strategic partners—crypto funds Polychain Capital, Parafi Capital, and Blockchain Capital, and anonymous DeFi investor “0xB1”—would now be involved in governing the platform, helping the protocol grow, provide long-term liquidity, and building more synergy with other institutional funds.

“Over the past year, close to 1% of circulating Bitcoin has migrated to Ethereum’s DeFi ecosystem and made productive in various yield generating opportunities,” said Santiago Santos, a partner at ParaFi Capital.

He added as more Bitcoin holders looked towards interacting with DeFi apps, Badger would capture the growing share of that demand.

Jacob Phillips, a Technical Researcher at Polychain, said that by aggregating existing Bitcoin DeFi protocols, building out a suite of new BTC-focused DeFi products, and economically aligning a community passionate about BTC in DeFi, Badger was quickly becoming a Schelling point for both new and existing Bitcoin liquidity.

Not a 21 meme

In the release, Badger said the treasury diversification marked the start of the “Badger Backstop” fund—an effort that would see continual development towards securing user assets and growing the protocol “regardless of the market conditions.”

The release said:

“We plan to use a portion of the DAO capital to create an insurance fund, providing increased platform protection for our users — which will drive increased TVL in the long run.”

Doing so would avoid the situation of protocol development ceasing in case of an unfavorable market (last seen in the aftermath of the infamous 2017 ICO bubble).

6/

Although there will only be 21M Bitcoin & 21M Badger, there will NOT only be this $21M diversification. This represents the first tranche of potentially 3 we intend to complete over the coming months as outlined in BIP 37.

We'll continue to look for the right partners.

— ₿adger DAO (@BadgerDAO) March 3, 2021

Meanwhile, despite the “21” meme (of there being 21 million Bitcoin, 21 million Badger, and the $21 million diversification), Badger said the move was just the start of three upcoming diversification. The team said it would continue to find the right partners to grow Badger and build trust in the protocol.

“Badgers are relentless, fearless, and unshakeable,” the release ended.

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