Distributed ledger technology emerged as a solution to rescue us from the jiggery-pokery of centralized entities. They abuse our private information and make money off of it without our consent (remember Facebook?). Even the money we own, we're not in control of it - they decide when and how we have to use it. And the worst part is that so many people are excluded from financial services because of stringent and bureaucratic procedures.
Of course, bitcoin started the revolution of peer to peer transfer of value. However, bitcoin alone won't be able to cater to the world's population, at least not fast enough. In order to speed up financial inclusion, a special set of applications referred to as DeFi a.k.a decentralized finance are being developed to onboard everyone, regardless of their origin.
There're already hundreds of applications running in the defi space with different use cases - lending, borrowing, exchanges, portfolio managers, etc. And while most of these defi applications have practical uses, some of them do not add significant value to the DeFi ecosystem and therefore have a questionable future. One of the latest projects to join the DeFi space is Statera.
Origin of Statera.
Statera is a Latin word for balance. And while Statera is seemingly new, the developers behind the Statera project have been playing around the idea of deflationary tokens for a while before finally launching the Statera token. Their last attempts at deflationary tokens before Statera was BURN and ASH. The main reason for discontinuing work on both tokens was due to limited interest as the community didn't see enough value in them. Eventually, Statera was borne.
What exactly is Statera?
The Statera team describes it as a Smart Contract Powered Indexed Deflationary Token. If you're a financial expert, you might have some reservations as Statera doesn't quite tick all the boxes of a typical indexed fund. And yes, the Statera team has openly acknowledged that the definition is not perfect. The main reason for referring to Statera as an index fund is because it's their objective. They want STA to become an Index Fund in the future.
Still not clear about what Statera actually is? Well, think of it as a versatile deflationary asset which when paired with any other asset can extend its deflationary values to the asset in question. Thus, automatically passing on the monetary policy of Statera to the newly paired asset. This results in a more stable ecosystem with an increased probability of higher returns to those invested in the system.
Statera's main focus (for now) is to target liquidity pools and pair up with other defi assets therein. The presence of Statera in these liquidity pools makes them different from other automated market makers (AMM) like Uniswap, curve, etc and that is because of its ability to inject deflation into any pool it finds itself in. Also, Liquidity providers to a Statera pool like the Phoenix Fund have exposure to more than just two cryptocurrencies. Furthermore, Statera's agnostic quality makes it completely unique and also the first of its kind in the DeFi space.
The Statera ecosystem - how do you benefit from it?
I'm going straight to outline the various ways that you can invest in the Statera ecosystem.
1) The Statera Token (STA). This is similar to other cryptocurrencies and is what you would find on sites like coinmarketcap, coingecko, etc. Like any other crypto, whatever affects the Statera ecosystem (good or bad) will likely be reflected in the price of STA. For example, any important development/milestone will probably lead to an increase in the price of STA. Meanwhile, anything fishy with the project will likely cause the price of STA to drop. So holders of STA are obviously those who want to make the best/worst returns from the Statera project as a whole.
2) STA Delta Token. This consists of STA and ETH in the ratio of 50/50 (equal proportions of STA and ETH). Those who hold this token in the Uniswap pool will be able to earn fees for doing so.
3) STA Delta Liquidity Token. This is made up of ETH and STA in the ratio of 25/75. What does this mean? It simply means that you want to benefit more from the price appreciation of STA than that of ETH. In other words, if you think STA is going to do better than ETH but still want to keep hold of both tokens, then the STA Delta Liquidity token is what you want to hold. So your portfolio will benefit 75% of the price increase in STA and a 25% price increase of ETH. And yes, you also earn fees for holding the Delta Liquidity Token
4) Phoenix Fund. This consists of five different assets - STA Delta, wETH, wBTC, LINK, and SNX in the Ratio 40/30/10/10/10. respectively. If you want the most diversified holding, then go with this option.
So which of the above option you choose depends on your preference for risk. As you can see, the Phoenix fund is undeniably the least risky option of all.
How does STA work as a deflationary token?
Any transaction that involves statera results in a 1% burn of Statera's total transactional value. For example, if the current supply of Statera is 100,000 after a single transaction, the new supply would be 100,000 - (1/100*100,000) = 100,000- 1000 = 99,000.
So what will happen to the supply of Statera in the future given that they have stopped minting tokens and won't resume the process? Will the supply eventually get to zero? The short answer is no. The long answer is, well, the supply of Statera after so many decades will start to approach Zero but never actually reach an absolute Zero. And given that STA is divisible up to 18 digits, (a quintillion) there will still be so much to burn even when we are left with just 1 STA. But I'm also thinking that if this really becomes an issue, the community can decide (vote) to do a hard fork and increase the number of STA for example. After all, cryptocurrency is meant to be a People-centered currency where people decide what is good for them.
How to buy Statera.
There's a step by step video walkthrough by the Statera team on how to buy Statera. You can check it out here.
Is Statera secure/safe?
Back in June, a balancer pool containing STA and another deflationary (Stonk) was attacked. All Statera holders who held funds in this pool lost their STA. So how secure is the Statera smart contract? Long story short - the issue was not with Statera itself as their code was audited by a third party and no vulnerability was found. The problem arose because an attacker managed to spot a vulnerability in the way balancer was set up to combine with Statera and so was able to drain all the STA in the Balancer pool. This is not the first time that inter-protocol vulnerabilities are being exploited in the space. It has happened before to other crypto projects. This is just a summary of how the attack happened. For a more detailed and technical explanation, check out this article on Medium.
My thoughts and recommendations (uses)
Most blockchain startups (except those that are launched by renowned companies) usually have two main challenges to deal with in the early phases of their development: the security of their network and extreme price manipulation. To enhance security, some startups with low hash power might opt to merged-mine with blockchains with higher hash power or simply connect to an established and more secure blockchain with which it is interoperable.
So what about price manipulation? Sure, price volatility is a good thing for experienced cryptocurrency traders. But prolonged and violent price swings that result from whale manipulation aren't good for new/would-be investors. Of course, investors who believe in the fundamentals of the project might hang on during bearish moments. However, profit-minded and short-sighted investors usually resort to panic selling, which further pushes the price of the project's token down. This, in turn, might adversely affect the development of the project especially if they rely on funding from investors. We all saw what happened to many blockchain startups during the bear market in 2018. For example, steemit had to lay off 70% of its staff because the value of STEEM continued to tank considerably.
I believe the Statera token could be used as a supportive vehicle to help inject some level of stability to crypto or defi startups in order to reduce price manipulation. Even existing projects that are facing bearish and uncertain times can also benefit from Statera. I strongly believe this might help some Startups from being shot down or at least from laying off some of their employees. Of course, I understand that the Statera team intends to focus more on reliable cryptocurrencies in their pools, but as their network gains more maturity, they could lend a helping hand to other projects that need some level of price stability of their tokens. Obviously, this would require that all projects they want to partner with are properly vetted.
What I don't like.
This is not directly related to Statera itself but still important as it concerns the development of the project. I'm not satisfied with the frequently asked questions (FAQ) section of Statera. It contains very few questions and there's a high probability that people won't find all the answers to their questions when they visit that page. From my experience, the FAQ section of any project is usually one of the easiest places to learn about all important aspects of the project. With an overall decline in the global attention span, many people obviously lack patience and prefer to sort answers to specific questions one at a time. I understand that the project is very new, but this section is really very important for many people. The AMA that was done on Publish0x might be good but certainly not easy to scroll through. It was definitely not easy for me to keep coming back time and again to find answers to my questions.
I believe that the limited info on the FAQ section has contributed to the fewer submissions to this writing contest(compared to previous ones) in addition to the fact that Defi is new and quite challenging for many people to wrap their heads around the subject.
I'm sorry if I'm over emphasizing, but I really think the Statera team should update this section as soon as possible and continue to add questions/answers as they grow.
Should you invest in Statera?
Statera is a new Defi product. And yes, they've added value to the Defi ecosystem. People are excited about it and many have invested. Some even say it's a Defi gem that has the potential to "moon" as they say in crypto. But whether you choose to invest or not is up to you. Do your own research or consult your financial adviser. All I wanted to do is share my two cents about the Statera project.
I think Statera is a great project and has the potential to grow into something big not just in DeFi, but also in the cryptocurrency space as a whole. They've proven to be reliable (refunded those who lost funds in the balancer pool hack) from the start. But a good beginning does not necessarily equate to a good ending. After all, it's often said that an invention only makes sense in the world it finishes and not in the world it starts. So only time will tell if the Statera community can deliver.
Over to you.
What are your thoughts? Do you think Statera stands a chance to become something big in DeFi or crypto in general? Tell me in the comments section below.