Badger launches 0% interest Bitcoin lending with eBTC

Badger Finance has announced the launch of the Bitcoin lending protocol – eBTC. It comes with the offering of 0% interest and has been launched effective March 26, 2024. The mechanism leverages stETH by Lido. It enables users to borrow a yield-bearing Bitcoin-pegged stablecoin using ETH as collateral.

Simply put, users can now deposit Ethereum tokens in various forms as collateral to become eligible for eBTC at a 0% interest rate. It does not attract any initiation fees or repayment fees of any kind. However, it comes with a condition that users must at least collateralize 110%, below which borrowers will be liquidated.

In an official statement, Badger said that the mechanism sets them apart from conventional DeFi lending protocol. They added that the aim is to encourage everyone to build on this protocol by depositing Ethereum to borrow eBTC.

Lido’s Liquidity Observation lab announced that 15 stETH would be provided as additional incentives. These will be provided over one month to the early adopters of eBTC. The reward will be airdropped to users in the said time window. DeFiYaco, the Business Development Lead at LidoDAO, has appreciated the development. They have stated that it introduces exceptional new use cases for stETH by Lido.

DeFiYaco further said that the protocol will be able to provide a more capital-efficient borrowing option for Bitcoin on Ethereum.

Lido has been chosen as a partner because it sports a commanding TVL of $35.5 billion. It has often been recognized as the leading liquid staking provider and DeFi protocol that controls 30.3% of Ether’s supply.

The development marks a pivotal moment for Badger. It was earlier written down, slashing 98% of the TVL to transition the number from $1.2 billion to $23.3 million, according to recent reports. This was triggered by a front-end attack that resulted in the loss of $120 million on December 2, 2021.

Badger also marked a decline in its market standing due to the rise in competition in the industry through crypto lending platforms. That majorly complemented the issue of the front-end attack, which happened in December 2021.

Badger briefly acknowledged that aspect while talking about eBTC. The team said it prioritized the mechanism’s security by joining hands with five security partners last month. Also, the protocol has undergone several smart contract audits, economic risk assessments, and a pre-launch bug bounty.

This means that Badger was once a prominent name in the industry; it then experienced a downfall amid rising competition and front-end attacks. Badger is now ready to market the new protocol in association with five security partners and smart contract audits, among other measures.

A 0% interest Bitcoin lending protocol is a concept that has gained attention already. It enables the eBTC protocol and borrowers to generate staking yield by eliminating other ways that conventional DeFi lending protocols follow.