Statera is a very innovative concept and it does take some time to understand it wholly. To appreciate it’s benefits it helps to have some background in blockchain and cryptocurrencies in general and the DeFI (Decentralized Finance) industry.
In this article I will be covering an overview of Statera project, explain the Deflationary Index fund it is built upon and how it’s use cases can revolutionize the level of crypto adoption amongst general masses.
What Exactly is STATERA?
To summarize the game plan of STATERA I would say it is to introduce their native deflationary token STA (Statera) into a basket of cryptocurrencies to create a “Flexible” Crypto Index Fund. The reason I call this Index fund as flexible is that it quite different from regular index funds used in the stock markets. Traditional index funds are a simple collection of 30-35 or sometimes more stocks which are part of the market. Usually the biggest and hence more reliable stocks are selected and given a weightage into the index. The 30-35 stocks are regularly monitored and sometimes few stocks are removed from the index and new ones added to replace them. This is not common and happens only if something drastic goes wrong with the company included in the index.
In STATERA’s Index it’s native STA token is included with Bitcoin (BTC), Ethereum (ETH), Chainlink (LINK) and Synthetix (SNX). It’s flexibility lies in the fact that the weightage given to each asset is dynamic and the proportion of deflationary STA is continuously adjusted linked to the performance of other crypto assets in the Index.
What’s the Benefit of this Dynamic Proportion Adjustment of Cryptocurrencies in the Index?
I think this dynamic adjustment feature is a gamechanger and makes Statera much more resilient than any standard Index fund. A key objective of Statera is to keep increasing the profitability of the fund and this flexibility makes it resistant to sudden market fluctuations. As it keeps adjusting the proportion of deflationary STA token it is able to even out any sudden fluctuations in the market whether on the upside or the downside. This has a stark difference from typical stock index funds which crash when the whole market goes down.
How Does this Deflationary Token STA Work?
Inflation in today’s world is one of the biggest risk to wealth dilution and loss of purchasing power of your currencies. Statera burns 1% of each STA token to maintain a constant deflation rate. Deflation in STA ensures there is deflationary influence in the Index it is included in. This in turn protects the whole index against potential inflationary threats.
How does the Index Fund Work?
Inside the Balancer pool deflationary STA token is wrapped inside Delta token together with Ethereum. Statera is heavily linked to ETH as it is wrapped inside Delta as well as forms part of the core currencies that are part of the index together with Bitcoin, Chainlink and Synthetix. As Ethereum is the foundation of DeFi universe it is natural that it gets a high weightage in Statera index.
To ensure that the Index value appreciates in a smooth manner so investors in Statera get an even rate of increment in their holdings Statera buys more Delta when the market is rising and buys more of BTC, LINK and SNX when the market is falling. This helps to even out the external market volatility.
What is the Phoenix Fund?
Phoenix fund is another asset class inside the Statera suite. It consists of Delta token, wETH (wrapped Ethereum), wBTC (wrapped Bitcoin), LINK and SNX. This helps Statera take advantage of the arbitrage opportunities across Uniswap and Balancer in the price spreads between ETH, STA and Delta.
What is the Most Special Use Case of STATERA?
I would like to end this post with what I feel is the most special use case of Statera which makes it unique and gives it the potential to raise the level of crypto adoption across the masses which has been dismally low despite the span of over 10 years which have passed since the launch of Bitcoin.
Statera has mentioned in it’s whitepaper that their Vision is to put “cryptocurrency in every portfolio”, and I think they are well positioned to achieve that. Crypto is still not included in the portfolio of the vast majority as it is not an easy concept to understand specially for a newbie. The high volatility in crypto markets and the manipulation by whales makes the common man even more wary to venture into crypto investments.
Statera makes it easy for everyone to invest in crypto even if they don’t understand the cryptocurrencies and the underlying blockchain technology. A big advantage for the retail investors is that they are protected from the sudden market spikes due to crypto volatility. A steady continuous growth model will make this fund really lucrative for people who want to invest their savings for a long term goals with the assurance that their funds will keep growing safely.
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