Badger Finance has unveiled its latest offering, the Bitcoin lending protocol called eBTC, which was launched on March 26, 2024. This protocol, operating with a 0% interest rate, utilizes stETH by Lido as collateral, allowing users to borrow a yield-bearing Bitcoin-pegged stablecoin using ETH.

In simple terms, users can deposit Ethereum tokens in various forms as collateral to qualify for eBTC at a 0% interest rate, without incurring any initiation or repayment fees. However, borrowers must maintain a collateralization level of at least 110%; otherwise, their positions will be liquidated.

In an official announcement, Badger emphasized that this mechanism sets them apart from traditional DeFi lending protocols and aims to encourage participation by allowing users to deposit Ethereum and borrow eBTC.

As an incentive for early adopters of eBTC, Lido's Liquidity Observation Lab announced the provision of 15 stETH over one month. These rewards will be airdropped to users within the specified timeframe. DeFiYaco, the Business Development Lead at LidoDAO, praised this initiative, highlighting the new use cases it brings for stETH by Lido and the capital efficiency it offers for borrowing Bitcoin on Ethereum.

Lido was chosen as a partner due to its substantial TVL of $35.5 billion, making it a prominent liquid staking provider and DeFi protocol controlling a significant portion of Ether's supply.

This development signifies a significant moment for Badger, following a drastic reduction in TVL from $1.2 billion to $23.3 million due to a front-end attack in December 2021. Despite facing challenges from competition and security breaches, Badger is now poised to promote the new protocol with enhanced security measures, including partnerships with security firms and rigorous audits.

The introduction of a 0% interest Bitcoin lending protocol has garnered attention for its innovative approach, providing opportunities for eBTC protocol users to earn staking yield while avoiding the conventional fee structures of DeFi lending protocols.