Badger and Lido: the collaboration for a new era in Bitcoin loans

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News: Badger partners with Lido to allow users to earn by borrowing in Bitcoin. 

The debut of a new Bitcoin based on Ethereum will leverage the liquid-weighted ETH token from Lido, offering users the opportunity to obtain Bitcoin loans without additional costs and with rewards.

Let’s see all the details below. 

Lido joins forces with Badger to offer payments to users for Bitcoin loans

As anticipated, BadgerDAO, a pioneer in the Bitcoin (DeFi) sector with over $3.5 billion in BTC deposits, announced today the launch of eBTC, a synthetic stablecoin pegged to Bitcoin.

Specifically designed to offer the most efficient way to obtain loans in Bitcoin. This token is backed by staked ETH (stETH), a token representing ether staked on Lido.

Unlike traditional DeFi lending protocols that apply various fees to generate revenue, users can deposit Ethereum in various forms as collateral to obtain loans in eBTC.

Furthermore, this happens at a 0% interest rate, with no repayment or initiation fees. The eBTC protocol pegs its ETH with Lido (via stETH), allowing users to earn interest on their collateral instead of paying fees for the loan.

eBTC improves on the mechanisms used in other bitcoin wrapped instruments, such as WBTC, which rely on custody service guarantees to provide the necessary BTC support. 

By using the stETH collateral instead of relying on an asset custodian and eliminating the need to use cross-chain bridges, eBTC reduces an annual attack vector of $2 billion, offering a safer and more capital-efficient alternative.

With user-customizable collateral relationships, eBTC puts system security and solvency at the forefront. 

If the value of a user’s collateral falls below the required threshold (the minimum is 110%, the lowest available in DeFi), the protocol liquidates the position, distributing incentives among participants who contribute to maintaining the stability of the system.

Innovations in DeFi on Ethereum and Bitcoin

As part of the collaboration, the Liquidity Observation Lab (LOL) by Lido will provide an additional 15 stETH rewards to early adopters for a one-month incentive period. 

Additional rewards will be distributed through an airdrop at the end of the incentive period, allowing users to redeem their rewards without incurring transaction fees or having to deal with complex request procedures.

DeFiYaco, DeFi Master, has stated the following: 

“The eBTC protocol introduces a new exceptional use case for Lido Staked ETH, leveraging the power of staking rewards to provide a more capital-efficient borrowing option for Bitcoin on Ethereum.”

The collaborators of Lido are excited to support the further utility of stETH throughout the DeFi and are eager to see how far eBTC can go.

We remind you that Lido emerges as the main liquid staking solution on Ethereum, with over $36 billion in deposits to date. 

Furthermore, the token stETH, which represents the ether staked in Lido, is currently the largest decentralized financial token by market capitalization.

Spadaboom, founder of BadgerDAO, stated: 

“After 18 months of rigorous development, we are excited to launch eBTC, a truly unique DeFi primitive that makes it easy for anyone to borrow Bitcoin with absolute transparency. Finally, we can bring the power of Ethereum staking to Bitcoin and we look forward to enabling and encouraging anyone to build on top of this one-of-a-kind protocol.”

Security and functionality

BadgerDAO, after facing a front-end bug that affected the protocol two years ago, has committed to ensuring a high level of security in the launch of eBTC, setting a new standard in the DeFi space. 

Last month, the team collaborated with five security partners, including RiskDAO for economic risk assessment and Spearbit for smart contract auditing. 

BadgerDAO has adopted a minimal governance model for eBTC, ensuring that operations are resistant to centralized control and reflecting the commitment to a trustless DeFi environment based on the immutability of smart contracts.

BadgerDAO aims to further improve the eBTC protocol by introducing features designed to enhance user experience and platform functionality.

By including tools such as one-click leverage and looping capabilities. These new features will simplify the user experience and make speculative trading of the ETH-BTC asset pair more efficient.

*This article has been paid for. Cryptonomist did not write the article nor test the platform.