I am not a financial advisor, this is not financial advice, these are my opinions only.
First, Statera is a token that enables the creation of Deflationary Index Funds.
Second, Statera was part of an exploit in an exchange last week. The exchange code did not sync the exchange’s smart contract with the blockchain at each movement (sell, buy, swap, burn, etc.). So a malicious smart contract was able to get the smart contract out of sync with the blockchain which allowed it to steal money from the pool. Both the exchange and Statera are reimbursing users and Statera created a workaround so that all coins on the exchange are now ERC 20 Standard, so the deflation only happens on secure exchanges. There was no issue in Statera’s code, it is an immutable, audited, and secure token.
Third, to the math:
Statera has two main pools, I will do the math for return on investment (ROI) and then talk a little about it:
“Statera Pool” (Uniswap liquidity pool, this is where deflation securely happens, here you would hold 50/50 STA/ETH- also known as Delta Token)
24 hour liquidity: $144,001
24 hour volume: $100,050
24 hour Fees Paid to Holders: $300
$300/$144,000=.00202 or 0.20% daily return, which could be 6.44% monthly, which could be 113.83% annually (the interest is compounded daily)
Phoenix Fund (Balancer Liquidity Pool, here you would hold Delta Token/wETH/wBTC/SNX/LINK 40/30/10/10/10)
24 hour liquidity: $73,732
24 hour volume: $7,713
24 hour Fees Paid to Holders: $77.13
$77.13/$73,732= .001 or 0.1% daily return, which could be 3.04% monthly, which could be 44.03% annually (compounded daily)
Statera's June financial report showed the Balancer Pool was returning about 9% for the first half of the month, which with compounding would be over 18% for just June, also the Uniswap pool returned around 20-25% for the entire month of June. These even higher numbers can be attributed to Statera skyrocketing from 1 cent to 15 cents and back down over the course of the month. If the price remains volatile, expect similar returns. This is one fascinating angle of the coin: if you pool it volatility actually benefits you, which is a strong value proposition in crypto.
These returns are astronomical, though they are tempered by:
- Impermanent loss (it’s estimated a 5x move in price would affect your gains by about about 25.5% through impermanent loss, so 44%-100% could likely offset this)
- The daily shifts in the market can make the above returns go up or down, they are dependent on trades happening
- A drop in asset prices will hurt “returns” because of the absolute drop in value and impermanent loss
These returns are with the system only being live for a few days and working to build up liquidity and volume, in the past days Phoenix has returned 0.25% daily at times (149% annual interest if that happened everyday).
These are not “empty” fees, nothing in life is free, including exchange fees. Every time Statera’s pools earn a fee they are facilitating a trade, from Balancer Pools FAQ: “Balancer pools charge a percentage of the input amount traded for each trade. The fee goes entirely to the Balancer Pool liquidity providers.” The Statera pool provides liquidity and get’s the fee. The deflation of Statera helps to create more volume which facilitates more arbitrage and trades, which in turn decreases spread and slippage. Statera is providing a service of helping the market stay liquid and helping all funds to rebalance more efficiently.
As people start to realize the benefits of holding their SNX, LINK, BTC, or ETH in these pools demand will rise, helping drive more liquidity and more volume. This creates a self feeding cycle of the ecosystem constantly acting as a gateway to people investing in diversified portfolios while benefiting themselves and others. This will also drive more benefits to the exchanges these pools service to ensure people can trade economically and efficiently.
These returns could lessen as competitors come in and crowd the space, returns like these speak for themselves. They could also lessen as the pool hits extremely large amounts of liquidity, if the size of the pool was larger than the requests for trades it would hit a plateau, however the old pool was up to $500,000 and still returning similar numbers.
It looks like I am not the only one doing this math. A new whale has entered the ecosystem. This new holder now has more Statera than the developer wallet. One person acquired 3.9 million STA over the past 7 days, ($78,000 at the time of writing). He is also heavy in other spaces of DeFi (SNX, DMG, RSR, KNC), this could also be linked to the Chinese exchange Hoo listing Statera, as the wallet also holds a few Chinese tokens. What does he know that we don’t? Maybe the math above?
This project is TRULY decentralized, it is owned by the community. Let's look at a hypothetical: If the Statera team all vanished the system would continue (the contract needs no one to function), everyone could leave the system and one single whale could put his money in the two pools and make these returns indefinitely (the STA would be worthless, since no one else is in the ecosystem, reducing some volume, but the other tokens would continue to rebalance, aided by the deflation, and the returns on ETH, wBTC, SNX, and LINK would be worth it). The value proposition is built into the token, built into the ecosystem, it's intrinsic.
So why a billion dollar cap? Statera facilitates and supports DeFi, liquidity provided by users is central to DeFi. Currently DeFi has a 3.1 billion dollar market cap. If we have a bull run to a market cap of 1 trillion and DeFi maintains its dominance we would see it go to about 15 billion, but I foresee it’s dominance growing and it being closer to 20-100 Billion in market cap. Which means Statera would need to be 1-5% of DeFi’s market cap. However Statera could help with exchange liquidity, investing easily into crypto (you just buy Statera and access the price action of all tokens it is pegged to along with the benefits of deflation), and could be included in any financial product in the crypto space to give it deflationary and sound monetary policy. Things like 20-200% annual returns will not be ignored. So I think even a 5% size compared to the DeFi space could be conservative, but just to be realistic, if Statera maintains and grows it’s ecosystem, it will hit a 1 billion dollar market cap in our next bull run, judging from its current effectiveness, displayed by the math above. The last bull run saw things like Dragonchain that were just vaporware surpass 1 billion in market cap, imagine what an asset with an actual value proposition could do. Statera is the first, and currently only, deflationary index fund that supports systems it is in while benefiting its holders.
To read more about Statera read my four part series on it here.
Again, I am not a financial advisor and nowhere above did I tell you to invest in anything, research deeply and make your own choices.