Let me begin by stating that I have never entered into any of the writing contests on Publish0x so far - mainly because the topics did not interest me too much. However, this Statera project is a little different from anything I have seen before and the fact that it is ranked beneath the 2500th position gets me EXTREMELY excited.
For this reason, I have decided to take part in this competition and elected to create somewhat of a manual to help you understand if Statera could be a potential investment for yourself.
At a first glance looking over this deflationary coin, I was pretty darn confused. However, after digging deeper I feel like I have a solid understanding of the project now.
What helped me to understand this a little better was an Inception analogy which I will cover below. As you will find, there are options to have investments inside of investments - dreams inside of dreams.
Let me start at the beginning and explain what this project actually is.
Statera - The Deflationary Index Fund For Everybody
You see, Statera describes itself as a deflationary index fund. This can be quite confusing initially but it’s just a bunch of fancy words and I can break it down to make it easier to understand.
An index fund is a type of investment vehicle in traditional finance that allows investors to buy into an entire portfolio of assets that are weighted and rebalanced accordingly. An index fund could be a mixture of GOLD, OIL, SILVER, and COPPER with a 25% weighting each. When the prices of each of the assets change, the index fund needs to be rebalanced by selling the overweighted assets for underweighted ones.
Statera brings the concept of an index fund to the blockchain in a totally decentralized fashion. In fact, its all run through smart contracts so you don’t even need to balance the portfolio itself.
The deflationary part of this equation is unique to Statera. The protocol behind the project is designed to take away 1% from every single STA transaction to be removed from the supply as its burnt.
We all know what happens when we see a decreasing supply in any asset - the price goes up so long as the demand stays the same!
Okay, now that I have that out of the way, let me discuss the potential investment options that you have with Statera.
Which Investment Vehicle Should You Be Choosing?
DISCLAIMER: I AM NOT TELLING YOU TO BUY ANYTHING HERE. EVERYBODY IS IN DIFFERENT FINANCIAL SITUATIONS AND, THEREFORE, YOU SHOULD DO YOUR OWN RESEARCH AND NEVER INVEST WHAT YOU CANNOT AFFORD TO LOSE.
Sorry, just had to get that out of the way so people just do not blindly start to invest based on what I say next.
Now, there are two options for you to invest in through Statera;
- The DELTA token
- The Phoenix Fund
The Delta Token
The Delta token can be thought of as an index fund that has an equal 50/50 split between Statera and Ethereum.
The Delta Token is a Liquidity Pool token in which a Uniswap V2 ERC-20 token is rewarded to Liquidity providers that invest in the STA-ETH Liquidity Pool.
When a user deposits liquidity into the pool they are helping to add depth to the liquidity market which allows traders to conduct decentralized trades between STA and ETH on Uniswap. Each time a trade is made, owners of the Delta Token are paid the fees.
Now, because STA is a part of this index fund, the deflationary aspect of the coin causes an increased level of volume for the liquidity pool. This is because 1% is burned on every transaction which reduces the supply which, in turn, increases the price. As a result, this causes the pool to make trades to balance the 50/50 split.
The Phoneix Fund
The Phoenix Fund a secure deflationary index fund that lives on the Balancer Pool. It is a portfolio of cryptocurrencies that users can invest in that is automatically rebalanced according to the set weightings.
The Phoneix Fund includes the following Tokens with their respective weightings;
- STA DELTA - 40% weight (50% ETH/50% STA)
- wETH - 30% weight
- wBTC - 10% weight
- LINK - 10% weight
- SNX - 10% weight
As you can see, there is a basket of cryptocurrencies that include the likes of Ethereum (wrapped) and Bitcoin (wrapped). It also includes LINK, which is pretty much the beating heart of DeFi right now as every project needs its decentralized Oracle solution, and Synthetix which is a rising DeFi Star.
The last coin in the list is the STA DELTA token. Remember STA DELTA? The one I just described above. Yes, that is here also!
The fact that wETH is weighted at 30% is due to the fact that ETH has a significant level of volume and, therefore, this should produce more fees for holders in the pool.
When you invest in the Phoniex Fund you are investing in all of these 5 cryptocurrencies. It is designed to always provide some positive price pressure. This is, once again, due to the deflationary nature of the STA token itself.
When the price of the STA token changes (or any token in this basket) the Balancer Portfolio needs to be “rebalanced” to the pre-defined weightings again. To do this, the pool will buy/sell between the tokens in the portfolio to achieve the set weightings. When this happens, investors that provided the liquidity to the balancer pool are paid fees.
So Which One Is Right For You?
Well, there is not one single answer to this question.
You can go simple and just invest in the Delta Token and keep your holdings on Uniswap.
On the other hand, you could invest in the more advanced investment vehicle in the Phoniex Fund which increases your exposure to more cryptocurrencies whilst at the same time reducing volatility.
You see, investing in the Delta Token itself will provide some substantial gains from the fees, and then any value increases in STA or ETH.
However, the Phoneix Fund seems to have some Inception sh*t going on.
Well, the Phoneix Fund is literally an investment inside and investment. A dream inside a dream.
This is because it contains the Delta token as one of the cryptocurrencies in the basket. The Delta Token provides dividends (fees) from the Uniswap Pool itself. So if you just hold this you are earning from the Uniswap Fees.
However, if you go ahead and then put this into Balancer, you are experiencing DOUBLE fees from Uniswap trades AND Balancer rebalancing trades.
You could also just view this as Babushka Russian Dolls.
The smallest doll would just simply holding the STA token itself.
The second doll would be the DELTA Token after liquidity has been added into the Uniswap liquidity pool
The third and largest doll would be the Phoniex Fund.
You can probably visualize this more easily in the following chain;
STA >>> DELTA (contains STA and ETH) >>> PHOENIX FUND (Contains DELTA (which contains STA and ETH) and 4 other cryptocurrencies)
So, what can we do with this information?
Well, that is entirely up to you to decide. The first option offers exposure to just STA and ETH. This is quite risky due to the fact that if one of the coin collapses (most likely STA in this case) you are pretty damn exposed.
On the other side, investing into the Phoneix Fund creates a scenario in which your volatility and exposure are reduced due to the fact that there is a larger basket of currencies to protect your investment. This option seems to be much more diversified and, better yet, gives you DOUBLE gains through fees.
EDIT: I forgot to mention the fact that you also get airdropped $BAL tokens when investing into the Phoniex Fund = more gains!