Crypto fans we love you, thanks for your work in separating money and state. Our leader Igor has thrown down the gauntlet again, so it's time to rev to redline and dump the clutch in the drag race for crypto truth. As Texas real time systems control scientists, we had a saying. "What the hell is that? Wait, I know what that is. Wait, what the hell is that really? " Later, as a Wall Street research analyst, this zen parable served us well. For the last two weeks we have been applying this koan to Statera. We read the Statera website, and the whitepaper. AND the balancing code, medium, reddit, AND went for long jogs and swims while we thought "really WTF does deflationary mean?"
WTH really is Statera ?
We all know by now Statera is a smart contract indexed deflationary token. And the standard definition then continues: (Statera) "synergizes with a trustless and community driven portfolio of class-leading cryptocurrencies. Every trade for Statera creates an arbitrage opportunity. Trading attracts liquidity, which in-turn attracts trading. Liquidity ripples and the supply of Statera decreases."
Whoa sorry, my bullshit meter just went haywire, can't tell if that's genius, sounds like total BS. Remember the gatherings where if someone said "synergize" they had to buy a round of drinks? We do. Those boys were right. Get synergize out of the definition and into the marketing please.
To continue - trades create arb opps and attract liquidity, which attracts trading, liquidity "ripples" ( spare us the poetics please ) and the supply of Statera decreases. What does it all mean ?
There is nothing new under the sun. Break it down quickly in order - Statera is an indexed fund. That's fine. It rebalances automagically driven by smart contracts. Coolio. It's hardwired to be deflationary, every time you send it, 1% of the Statera gets piffed. OK why not (why?) whatever.
The "synergy" part is where Statera runs on ( trustless and community driven) liquidity pools of leading crypto, and reaps liquidity rewards from the pool. Yes, whenever Statera trades, by piffing itself it creates an arb opp and need to rebalance, which tends to drive liquidity and more trading. Yeah yeah yeah, that's all true but man, sounds like a perpetual energy machine, or a crazy get rich quick scheme. We hear a bearded guy in the basement talking about feeding the cats to the rats and the rats to the cats.
So, let's take the deflationary part out for a minute. It is just bolted in anyway. Then the whole project makes some sense.
An index fund has a huge use case in the real world - it is to get rich slow, but not wreck. Index funds kicked the ass of many hedge funds and managed portfolios over the last decades. And smart contract auto balancing is fine, take all the mystery out of the mechanics. Though that balancing could be set to be overly hair triggered, burning transaction fees in the old world. Without the deflation, we could say good crypto index funds will be a use case. In the bad old days, you had an index fund, or maybe instead your portfolio lost money while your portfolio manager went to Vegas with his broker, or your hedge fund guys charged big fees and did god knows what up to and including losing your money and crashing the world financial market (LTCM looking at yall.)
So use case is go! Except Statera gets delusions of grandeur and starts talking use cases of bringing crypto to your grandmother. Bolt deflation onto a balancing portfolio of anything in order to convince the universe to take crypto. Slow down slugger. The primary use case of Statera is to get rich quick, be honest. And an index fund, by definition, SELLS THE WINNERS AND BUYS THE LOSERS HELLO HELLO??!!?? NOT the way to moon and lambo. When you read about Statera, this is called "unrealized loss" when compared with a basket where the investor just bought the crypto and left Statera out of it. Then some folks say this "unrealized loss" would disappear if the underlying crypto in the portfolio moved up again and BOOM NO IT MAYBE WOULDN'T, you sold the winners and bought the losers in that portfolio. And would automatically do it again.
But wait there's more. High transaction fees are kinda good for Statera, because Statera is getting paid for liquidity. Again, that's old hat. In the heady days of electronic exchanges birthing, fighting and merging, Wall Street hosted electronic traders who were doing it only for the exchange fee kickbacks. Always thought this was a temporary side effect of exchanges overpaying whilst trying desperately to crank up the volume to survive. Often exchanges would lie about their volumes. Does that sound modern or what???
WAIT WE KNOW WHAT THAT IS ! Statera is Atomic Wallet Coin! it is a project centered around a DeFi Dex. We give money to this project. It pays us back in vague interest that may or may not be worthwhile ( compared to the price gain or loss of the crypto.) Our money is used to fund growth in the DeFi project. If that DEX rocks the coin goes way up!!! Yep thats it. Wait, no, wait, wth is that? . No, Balancer tokens =! AWC. No, wait...
OK, so STATERA is a crypto project that creates an automatic index fund. Is that a good idea ? Hell yes. We are all trying to put together some sort of diversified crypto portfolio ( unless we are toxic bitcoin maximalists.) STATERA also harvests trading fee income from its own rebalancing and for living in the liquidity pools. Is that a good idea? Yes, it will earn back at least some of the portfolio opportunity costs from REMEMBER WHEN THEY SOLD YOUR WINNERS EVERY TIME THEY WENT UP? And, admittedly, if Statera hits the sweet spot in high fees paid back from the "exchanges" that could really rock pretty good, maybe better ? Lot of moving parts.
And so, we circle back to the deflation. WHAT a party trick for the brain THAT is. Deflation reminds us of the death investment pools that used to be popular in the last centuries, where whoever lives the longest acquires all the assets in the pool. A great idea until the murder starts. For starters, no one seems to know what deflation really means. And man, I hate ukuleles. People say bitcoin is inflationary since the price went up so fast. They say Bitcoin is deflationary because it is 21 million only, including the coins in your lost wallet. Bitcoin is designed as neither in- nor de-flationary but disflationary, a neutral fixed supply. Bitcoin's supply is supposed to be inflationary at this timeline, going up slightly right now from mining. Bitcoin in the real world right now is slightly deflationary, supply actually going down from lost coins overwhelming the mined coins. Most people think that a shrinking supply of money causes prices to fall in the economy and that's the real meaning of deflation, which is both not really true nor a true causality.
Well, god bless em, STATERA just shoves the textbook deflation right up front, nailed to the door with smart contracts. Let's rock this boat up and down the supply & demand price curve. Statera offers this bolt on deflation on various attractive underlying portfolios or on just ETH and STA. Haters gonna hate, Statera is gonna deflate baby. And on economists' micro and macro graphs, that means price increases in the face of any real demand. But does it really?
It's good that STATERA offers the simple case - a one coin STA portfolio. An old wall street analysis trick is to overamplify an effect to see what it means in the extreme. Want to think like a Wall Street chithead? try this one. Is an increase in the minimum wage good for society? Well, if it was, then increase the minimum wage to 4,000 per hour, works for us. Oh wait, we would all be out of a job ? congrats, you insensitive brute. So is deflation in and of itself a good thing? Well crank that smart contract up. Something like 5% of statera has already burned. Go back in time and set the contract to burn 90% everytime, or ignoring zeno's paradox make it 90% or 95% or 99% or ?? of all the STA has been burned now. Is deflation alone a good thing? Would that alone make STA worth 95% more? no it would NOT. All the deeper Statera literature does mention the last man hodling can't sell & is stuck with the bag. But none of the STA writings seem to care about that. Why ? because the use case is, in fact, make money now.
But, wait! Now how much is it worth? STA's deflation is not alone, it's in a system with fees coming from the DEX. With maybe insane fees coming in from the DEX. and.... if all that deflation trading stirs up those exchange fees right when DeFI is eating the world (taking all the fees from traditional exchanges) that would really help on the "interest" side. AND, kaboom, pow, zap - here's the big pumping noise - most of the world is never going to think about STA at the end of deflation. But that world very well might be part of a market driven supply and demand curve pushing prices up. Too much clean water will kill ya. But the right amount of deflation just might be magical in the market.
So we have great and good ideas stacked on OK ideas stacked on conservative portfolio ideas ( good or bad, your call) stacked on shaky long term ideas with questionable sustainability that could look amazing in the mid term. Overall, makes more sense that the giant modern monetary theory MMT justification running all the central banks printing these days. And most of Madoff's clients made money!!! Makes more sense than any number of value props. How will it mature for real? No one knows. We can do our own research but still no one knows the future here.
So we like STA, think we want to buy some now?
What does the market show us? Early deflationary tokens BURN and ASH sort of worked. Balancer, the liquidity pool under the first version of STA, worked pretty good until it didn't when hackers hacked the smart contracts. They took a flash loan out to exploit the fact that Balancer did not properly synch the entire chain every time trades were made. Cranked up the trade volume until the STA predecessor deflated to glory, then cashed out, very pro job, set up with multiple accounts ahead of time and washing heavily on the way out. Actually proved our point that deflation alone does not increase value, though the exploited Balancer system thought maybe it did.
What to think about that? Well, the STA team took the hit like very upright people. They PAID THE MONEY BACK AND STARTED THE PROJECT ANEW. Wow, baby, hand us a no prize, those are some true believers. OK, we're in. It might be a project where ya watch the exit like a hawk, but we are in. Can we buy STA on atomic wallet yet? The Statera crew is pretty secret, which is usually scary. EXCEPT THEY PAID BACK THE HACK AND STARTED AGAIN. Most roads lead to a South African crypto crew, some of whom disappear on linked in. But South Africa is a player in the bitcoin olympics. https://www.publish0x.com/hi-i-am-dave-and-i-just-got-hooked-on-crypto/altcoin-olympics-chitcoin-medal-count-by-country-xpjjdqg . And secret founders are such a thing now. Plus big points for the Publish0x effect boosting the crypto featured ( how about some STA for the contest gladiators pals??) Seriously, facing an AMA is always a strong move.
Hey Statera, ya wanna use case? Make boring index funds with little or no deflation. Not glamorous / lambo enuff for ya, didn't think so, ok try this one. Make the smart contracts SELL THE LOSERS AND BUY THE WINNERS. Really fast. Oh wait, we worked on that on wall street in the eighties. They called it dynamic hedging, front running really quickly in the options market. Worked great in the research lab, in reality it worked well in many markets but when things really start moving ( FOMO or FUD ) the execution and pricing failed ( sound familiar ? ) when black swan action kicked in. Statera, pro tip, if you do that one don't use the name "dynamic hedging" as we may have caused the crash of 87 (but the statue of limitations has passed. )When black friday comes....you know it's got to be... wow, now they think of black friday as one of the biggest IT fubars of all time... hey, they can't take that away from us ;-}
So anyway, thats what Statera really is. A smart contract index fund defi project, taking liquidity "exchange" fees while rebalancing like crazy, driven by bolted on deflation designed to decrease supply to increase prices to attract demand. Feel free with any questions. We will sleep a lot better now that that's all clear.
Will it rock out? Maybe... It is backed at (re) launch by a team that sucked up a half million dollar hit ( millions if you include the loss from STA tanking 70% ) to show their love and get back on that bronco. So some smart money that has thought about it for a long time says yes. Are we buying some ? Yes, damn straight. Just don't say synergize again thanks.