A New Bitcoin-Pegged Stablecoin Enters DeFi

BadgerDAO is partnering with Lido Finance to launch a new Bitcoin-pegged stablecoin, eBTC.

This initiative represents a new approach to Bitcoin lending by using the Ethereum blockchain as backing through the Lido staked ETH token (stETH).

A new stablecoin enters DeFi

The eBTC stablecoin emerges as a unique offering on the DeFi market. To enable users to borrow Bitcoin at 0% interest without loan origination and repayment fees.

This system allows Ethereum deposits to be used as collateral in various ways. It also allows users to take out EBTC loans while earning rewards on their deposits through Lido.

eBTC uses stETH escrow, different from traditional capped Bitcoin systems that rely on third-party escrow services for Bitcoin support. This method aims to reduce the risks associated with crossing bridges. These are vulnerable to attacks, which cost the Diffie community about $2 billion a year.

“As more retail users join Web3, they naturally want to use financial services with their crypto assets and do so in a very transparent way. That is what the EBTC protocol enables. ETH has a high yield and the ability to borrow BTC without limits at no cost,” a BadgerDAO spokesperson told BEncrypto.

Read more: Guide to the Best Stablecoins in 2024

In addition, eBTC introduces customizable collateral ratios for its users, with the minimum limit set at 110%. This feature increases system resiliency by automatically flushing areas that fall below a set buffer value to ensure continued protocol stability.

To encourage early adoption, Lido Liquidity Observation Lab has announced that it will distribute 15 stETH in rewards within one month by facilitating an airdrop to reduce participants' transaction fees and streamline the reward collection process.