Badger Boost Power-UP: Stake Ratio Levels

Mr. Po

Mr. Po

Aug 03, 2021

Badger Boost is a way to increase your rewards in BadgerDAO Setts, which is derived from your Badger and DIGG balances on Ethereum. The higher the ratio of your native balance (like bBadger or a DIGG LP) compared to non-native balance (like funds deposited into BTC Setts), the higher the Badger token rewards you receive on your non-native vault positions.

That ratio is called the Stake Ratio, and the basic formula, introduced in BIP 24, is relatively simple:

Stake Ratio = [$ value of BADGER Balance + $ value of DIGG Balance] / [$ Value of non-native staked sett positions]

A change to the model that makes the Boost more powerful was introduced to the community in a topic-specific Discord channel a couple of weeks ago. As a result of the discussion, a new way of approaching the Boost calculation came to life. This new model was then published on the governance forum as BIP 63, passed the snapshot with 99.83% approval, and will be live in the app in the nearest future.

The new model for the multiplier calculation improves the Boost scalability and creates a direct connection between users’ Stake Ratios and the level of rewards they receive.

There are going to be 20 levels with a specific multiplier assigned to each Stake Ratio Range. So each Sett will have 20 APR levels, and all users on each level will have the same APR in Badger rewards.

All the underlying rewards (like Curve LP fees or Convex token rewards) remain unaffected by the Boost.

When users level up within the new model, their multiplier increases at minimum to the same proportion as they’ve increased their Stake Ratio. So, for example, moving from 10% to 15% Stake Ratio increases the multiplier 1.5x from 200 to 300, while going from 4% to 8% makes it rise 3x from 50 to 150.

As the Stake Ratio is based on the dollar value of native to non-native assets, both are subject to price volatility. So if one wants to stick with a certain multiplier level, it would make sense to leave some buffer over the lowest Stake Ratio threshold.

This price volatility, however, affects the whole distribution and works both ways. For example, let’s imagine that the price of native assets decreased 50% compared to non-native assets. In this case, in the vacuum, it would mean that about the same percentage of Badger rewards would go towards a user who initially had a 12.5% Stake Ratio that then became 6.25%, even though the multiplier had decreased from 200x to 100x. In reality, of course, the Stake Ratio distributions and the prices of all the assets involved would also be affected by the actions of the market participants and thus would be subject to constant change.

Distribution-wise, Badger Boost Power-Up means fewer rewards for the bottom of the Stake Ratio and more for the top. It also encourages users to increase their native balances regardless of their current position. The closer they are to the next level threshold, the cheaper it is to level up.

It is important to note that the new model doesn’t work in a way where the top half of the distribution always receives more rewards and the bottom half less, which was true for the old model. For example, if everyone had a 100%+ Stake Ratio under the new calc, everyone would receive pro-rata rewards, while with the old calc they would still have various multipliers based on their leaderboard positions. So with the new model, it’s more about getting to your Stake Ratio level and receiving your share of the pie instead of competing with other users and monitoring their behavior.

Since its inception, BadgerDAO has been distributing its tokens to the users so that they would have a say in how the products they use are governed, and there are plans to continue to do so indefinitely in a sustainable manner. The Boost Power-Up change will further align the two groups of token holders and product users to the mutual benefit, as being a user of the product allows making more educated decisions when governing it.