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Bitcoin in DeFi gets a promising boost as two major yield vault projects join forces
Today, Bitcoin-on-Ethereum yield vault project BadgerDAO and fellow yield vault platform Yearn.Finance announced a partnership designed to bring Yearnâs sustainable vault expertise to Badger.Â
âToday weâre excited to develop a partnership that will bring our teams together to further accelerate best in class BTC vaults for the industry,â BadgerDAO said in a blog post. âThis is a step to further secure users funds as we continue to introduce more Yearn developed, maintained and secured vaults to our users.â
Badger will migrate their current synthetic Bitcoin vault balance to Yearnâs, and the Yearn vault will display in Badgerâs app. Additionally, the two protocols will work together to build a new WBTC vault. The fees from the vaults will be shared between the Badger and Yearn protocols.
The partnership between the yield vault projects accomplishes two goals: ensures sustainable yield for Badger vaults, and grants Yearn strategists meatier compensation.
Currently much of the yield from Badger vaults is supported by the emission of $BADGER, BadgerDAOâs governance token, and $DIGG, a synthetic rebasing Bitcoin. However, there is a cap on these yields as only 21 million BADGER and 4 thousand DIGG are currently scheduled to be minted. Eventually, the yields will dry up.
In their announcement post, BadgerDAO noted that partnering with Yearn will enable them to construct high-yield vaults even without the distribution of governance tokens â ultimately a more sustainable model.
âYearn built strats help as yearn v2 is solely focused on sustainable non subsidized yield,â said Palmer, a soon-to-be core member of BadgerDAO. âWe are aligned with andre in the train of thought itâs best to partner and collaborate with the best in niches. Yearn is the best at non subsidized strategies.â
In return, Yearn vault strategists â whom the announcement noted âare the best in the worldâ at what they do â will receive an additional reward on top of their normal vault performance fee from Badgerâs âdeveloper mining program,â a $258 million dollar fund dedicated to incentivizing developers to build with Badger.
âOur goal is to create positive cash flow products. We canât give badger/digg out forever,â said BadgerDAO founder Chris Spadafora. â [...] Helping compensate strategists through our dev pool will ensure developers are incentivized and are rewarded.â
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