*obligatory not financial advice*
What is Shade?
Shade Protocol is an ecosystem of connected private DeFi applications running on Secret Network, which is a smart contract blockchain with Monero’s level of privacy. The DeFi sector is booming and has no shortage of innovation, but most blockchains are public and lack privacy. This transparently has its perks because you can see how much of the supply of a token is held by whales and how they spend it but this can be a problem too because any action on big addresses can cause mass sell offs and since all addresses and transactions can be observed and traced the anonymity of the users is always at risk.
Shade will soon launch early next year, or maybe even before the year is over and it will bring the first private decentralized stablecoin and slowly add other DeFi tools like synthetic assets, lending protocols and even leverage trading features.
Stakers of ATOM, SCRT and LUNA will all receive an airdrop of its governance and utility token called SHADE.
The Silk Stablecoin
Silk is the first feature of the Shade Protocol and it will also be used by other features built on top of it. The stablecoin is pegged to the US dollar and its peg is maintained algorithmically in a decentralized way similar to how LUNA and UST work. A new Silk token can be created by depositing $1 worth of sSCRT, the number of new Silk that can be created per day is limited and that limit is set by the DAO. Existing Silk can always be traded with $1 worth of the government token SHADE.
That means that if the value of 1 Silk falls to $0.95, then its holders can sell it for $1 worth of SHADE and get an instant profit of 5%. Should the value rise to $1.05, then holders of SHADE and sSCRT can sell their tokens for Silk and get a profit of 5%. This incentives holders to regulate the supply of Silk and keep its value close to the dollar value. The protocol gets the price of SHADE and sSCRT with the help of the Band Protocol oracle.
All the sSCRT deposited to mint new Silk goes to a treasury that is controlled by SHADE holders, this means that Silk is not only algorithmically kept stable but also has a kind of collateral.
Silk is only the first tool in the Shade Protocol basket and there will be built many more that will utilize Silk. The developers of Shade are working on Shade Synthetics, which will allow the private trade of synthetic assets that mirror the price of various stocks, cryptos, commodities and indexes that will also algorithmically keep their price. The Silk stablecoin will be burned for the creation of such synthetics which will increase the demand for Silk and with it the price of SHADE.
The Shade Token and its Airdrop
SHADE is the governance and utility token of the Shade Protocol. It has a max supply of 10,000,000 and 1,450,000 SHADE will be airdropped to stakers of ATOM, SCRT and LUNA coins. SCRT stakers will receive 36% of the airdrop and ATOM and LUNA stakers will get 32% each. To get the airdrop you must have staked at least one of the three coins in a non-custodian wallet between November 7th and December 13th 2021 but you must have staked with a validator that isn't a centralized exchange and if you delegated to a validator outside of the top 10 you will receive a bonus.
The remaining supply can be released by users depositing sSCRT into the Shade Protocol smart contracts or by burning Silk for it. You can get $1 worth of SHADE for $1 worth of sSCRT or 1 Silk. The sSCRT deposited for minting SHADE or Silk will go to a treasury that is controlled by SHADE holders. This sSCRT treasury gives all the synthetic assets on Shade additional back up and it ensures that the value of SHADE will also moon should Secret Network take off because the value locked in the treasury will grow.
Besides governance the main utility of the token is to stablelize value of Silk and potentially other assets build on Shade similar to the LUNA coin from Terra. The more assets and stablecoins are being built on top of Shade, the more demand there will be for SHADE and the more value will be in the treasury and since SHADE has a limited supply it will grow in value together with its protocol.
The Shade Protocol is one of very few privacy preserving DeFi protocols and as such it has insane potential and its governance token has a solid utility that could drive up its demand. However, its success depends on how well SCRT performs and privacy coins are always at risk of being beaten down by regulators. It will launch on the main net of Secret Network soon and if you can get an airdrop you should claim it.
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