In 2019, the first self-destructing cryptocurrency was launched. It was called ‘BOMB’. BOMB was a simple deflationary cryptocurrency. The project received polarizing feedback from the crypto community. They wanted to address ‘token velocity’ of the tokens in the decentralized world. Token velocity is the speed of release of new tokens in the ecosystem. BOMB was a social experiment but it made people interested in the tokenomics of deflationary cryptocurrency. BOMB also demonstrated that there was a market for decentralized hedging against inflationary instruments. Statera project started just like BOMB in an ordinary manner but later they came up with a more experimental and dynamic concept.
“If you want something new, you have to stop doing something old.” – Peter F. Drucker
Statera innovation - Deflationary Index Fund
This crypto space is often complicated for the newbies now. Traditional finance has merged with the decentralization of cryptocurrency to form a new domain – Decentralized Finance or DeFi. The traditional financial concepts are always relevant. Today all these concepts are getting new lease of life in DeFi. An index fund is a type of mutual fund or exchange-traded fund (ETF) which has a pre-constructed portfolio to track the components of a market index. A market index can be S&P 500 or NYSE Composite Index. Statera project’s native token is also called Statera (STA). It is a smart contract powered Indexed token in automated Balancer Pool. The token works with a community-driven trustless portfolio of crypto assets. The portfolio includes Wrapped Bitcoin (WBTC), Wrapped Ethereum (wETH), Chainlink (LINK), Synthetix (SNX), and Delta (50/50 ETH/STA). Different assets have different weights in this portfolio - Delta (40%), wETH (30%), WBTC (10%), SNX (10%), LINK (10%). Obviously you can see that high weights are given on Ethereum.
The name ‘Statera’ is derived from the Latin word for ‘Balance’. Statera’s Index Fund is a hybrid of a liquidity pool and an index fund. The smart contract is programmed to function in an intuitive manner to balance the portfolio. Sounds awkward? The financial robot manages everything for you. Statera is deflationary. On every Statera transaction, 1% of the value of the transaction is burned. When the price of an asset increases within the portfolio, the robot sells the appreciated asset and rebalances the portfolio. Yes, that’s how ‘Balancer Protocol’ works by using Smart Order Routing (SOR) and makes an automated market. If STA price drops, Delta is sold for other assets and vice versa. Delta token price fluctuation creates constant arbitrage opportunity and portfolio rebalancing. Every time the portfolio rebalances, Delta token volume changes. Delta consists of 50% STA. Every STA transaction causes deflation of STA. Deflation means reduced supply. When supply becomes less, demand increases. Increased demand for STA adds more trading volume of STA. More trading volume of STA leads to more burning. So STA gets the huge scope of price appreciation. The portfolio also provides you with liquidity and collects trading fees for you. More trade volume means more fees. Self-sustainable automated portfolio management helps you to gain profit constantly. Yes, that is the concept of Indexed Deflationary Token (IDT). It mitigates your sector exposure risk and drives portfolio gain.
Statera – an imaginary use case
Right now, Statera is using Balancer Pool automated market-making (AMM) system. But Statera can be used in different kinds of portfolios with different types of market-making protocols. As it is an ERC20 token, obviously the portfolio management needs to happen on the Ethereum blockchain. Bitcoin has already arrived on Ethereum as WBTC. Litecoin has also arrived on Ethereum as an Ethereum wrapped token a few days back. Ethereum can tokenize any kind of asset and Statera can balance any kind of portfolio. Imagine a portfolio of tokenized gold, real estate, Bitcoin and Ethereum. Your portfolio manager Statera will deploy the bots to manage it for automated daily return for you. Statera envisions to put ‘cryptocurrency in every portfolio’. Statera can invite more people to experience decentralized finance while maintaining their privacy, security and providing autonomy. What if they use AI? I’ll like to see them implementing machine learning bots which get trained along with the trades and increase the efficiency of trading towards generating more profit. That future is not far away.
”The early bird catches the worm” – old proverb
If you want to invest in Statera’s Deflationary Index Fund, check this detailed medium post by the team. The process is very properly explained there. So far, they are able to generate a net return of 15-20% per month for the holders. J.M Barrie’s Peter Pan spent his never-ending childhood on Neverland as the leader of the lost boys but DeFi is not a ‘La La Land’. DeFi is real, dynamic and the protocols are ever-changing. We need to experiment with new ideas. A deflationary token inside a rebalancing pool is a bold idea. BOMB only tried to address the ‘token velocity’ problem. Statera comes with the practical application of deflationary index funds in DeFi. If you want to grow your Ethereum holdings over a period of time, give Statera a try before the return of the Ethereum bull.
Statera – Important Links
1. Statera Website
2. Trade Statera (STA) on Uniswap here.
3. Phoenix Fund in Balancer Pool
Note: The images (if not cited) are created by the author using free vectors.