Statera tries to simplify the adoption of cryptocurrencies and above all to make investments convenient through a deflation mechanism. In fact it is an IDT (Indexed Deflationary Token). Basically the idea is to burn Statera following each transaction, reducing its offer. The demand instead increased thanks to a balancer pool.
The index pool includes:
✅ Wrapped Bitcoin → 10%
✅ Chainlink → 10%
✅ Synthetix → 10%
✅ Ethereum → 30%
✅ Delta Token (Statera/Ethereum) → 40%
Delta Token allows deflation in all trades made.
In other words, it is an Ether / Statera liquidity pool in which by providing liquidity (on Uniswap) you are rewarded (the Delta Token value depends on Ether and Statera).
Why was Ether chosen? Because it is the most used protocol among the top 100 cryptocurrencies. The volume and therefore the rewards that can be obtained are increased by owning Statera.
In each transaction in Statera's Index Fund, 1% of the value of that transaction is burned. Meanwhile, in the index fund portfolio, all five tokens maintain a balanced share through smart contracts.
When the ratio of one token increases compared to the others, the portfolio will rebalance itself by selling the token that has gained value. In a nutshell if the Statera price drops, the portfolio manager will sell the other coins per Delta. If the Statera value increases, the portfolio manager will sell Delta for the other currencies.
What happens if the price of the Delta Token fluctuates? A kind of arbitrage that destroys or creates Delta Tokens (this causes deflation).
Having Delta in the portfolio (or Statera), the deflationary process of Statera accelerates therefore the tokens are burned and the offer is reduced. Do I send Statera to someone? Due to the "burn" mechanism, the offer decreases but at the same time ... the value increases. Thanks to this, moreover, the trading volume of Statera is destined to increase. As was said at the beginning, the portfolio acts as a liquidity pool and allows you to collect commissions (given to holders).
I give an example to better explain the concept.
If I send 200 Statera in a transaction, 1% will be burned (2 Statera). This reduces Statera's supply and theoretically should increase its price (because it reduces the offer).
As we know, however, the price increases if there is demand. But how can we be sure that demand increases? This happens thanks to the Balancer Pools. STA is in a pool with WBTC, ETH, SNX and Link. So if the demand for those increases, STA is purchased to balance the pool. Whenever any of the five tokens increases in%, the Pool will sell and buy STA to rebalance.
Remember that every time you make transactions with STA, the 1% is burned so the value of STA increases progressively.
Two words should also be said about the Delta Arbitrage which allows you to buy Delta at a lower price and then resell it at a higher price which will compensate for the gas spent on the transaction.
For more info: Statera (White Paper)
It is certainly an interesting project, even if the economic extremes (inflation and deflation) have often been demonized. Let's think about the technology sector. In this sector, price deflation through the increase in productivity has certainly been positive. In recent decades, speaking of HDD, technological improvements have led to significant reductions in the average cost per gigabyte of data. In 1980, the average cost of one gigabyte of data was $ 440,000. In 2010, the average cost was almost 4 cents. Resources within everyone's reach, higher quality and lower prices. If we think about it, Bitcoin, through Halving, adopts deflation strategies. Except that Statera does it faster.
Going back to the Statera Project, I would also add Augur (REP) and Ren (REN) to the pool or at least a mechanism similar to the darknodes to improve safety. RenVM could also be used instead of WBTC to bring BTC to Ethereum (also improving speed). Another idea would be to use a Proof of Burn where the burnt Statera originate a new token (token type: SlimCoin, Counterparty and Factom). This new token can be sold through a downward auction mechanism: those who offer less take the token. All bets in the auction are then distributed among the liquidity providers.