BadgerDAO partners with Yearn.Finance to build sustainable Bitcoin vaults

Today, Bitcoin-on-Ethereum yield vault project BadgerDAO and fellow yield vault platform Yearn.Finance announced a partnership designed to bring Yearn’s sustainable vault expertise to Badger. 

“Today we’re excited to develop a partnership that will bring our teams together to further accelerate best in class BTC vaults for the industry,” BadgerDAO said in a blog post. “This is a step to further secure users funds as we continue to introduce more Yearn developed, maintained and secured vaults to our users.”

Badger will migrate their current synthetic Bitcoin vault balance to Yearn’s, and the Yearn vault will display in Badger’s 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, BadgerDAO’s 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 — ultimately a more sustainable model.

“Yearn built strats help as yearn v2 is solely focused on sustainable non subsidized yield,” said Palmer, a soon-to-be core member of BadgerDAO. “We are aligned with andre in the train of thought it’s best to partner and collaborate with the best in niches. Yearn is the best at non subsidized strategies.”

In return, Yearn vault strategists — whom the announcement noted “are the best in the world” at what they do — will receive an additional reward on top of their normal vault performance fee from Badger’s “developer mining program,” a $258 million dollar fund dedicated to incentivizing developers to build with Badger.

“Our goal is to create positive cash flow products. We can’t give badger/digg out forever,” said BadgerDAO founder Chris Spadafora. “ […] Helping compensate strategists through our dev pool will ensure developers are incentivized and are rewarded.”