Since the Statera writing competition I have been thinking more and more about the ecosystem, what it does, and ultimately how it shapes up.
This is by no means financial advice, just me putting down some thoughts on how I interpret the ecosystem.
Many don’t see it the same way and that’s ok, we are all individuals, and the data is open to interpretation based on how you choose to use it… Statera is decentralised like that
As you are aware, currently Statera has three product offerings:
- Phoenix Fund
So what do they do? Well either you’re going to speculate on STA outright or you are going to pool. (I wrote some thoughts about this in a previous post you can find here)
Very often, and quite rightly so, when pooling is mentioned so is Impermanent loss. If you are unfamiliar with what an Impermanent loss is, I have included a summary at the bottom of this post (shoutout to @damada_21 from the main Statera telegram channel for pulling it together)
For me, the thing is that you can choose any other crypto asset out there and Impermanent loss becomes more “important” than it does for Statera.
Why? Well Statera is designed for pooling other assets are not. When you enter the Statera Ecosystem you need to wear both the proverbial Speculator and Risk Manager hats.
….. But what does that mean?
Let's look at Delta
Delta is not just a Uniswap v2 liquidity token, it’s much more than that. It’s a tradable asset! Where else can you buy a digital asset that is made up of 50% ETH and 50% another asset? There aren’t any*
And there is the core concept that I believe many don’t see. When you mint/ buy Delta you are taking the decision not to speculate on one asset but on two, you are spreading your risk.
From the second you hold Delta it’s no longer about STA, it’s about so much more.
The point that if STA has exponential growth, you don’t take all the gains is true. There is no denying that… but there are other options to consider:
- But what happens when ETH does the same?
I mean, many in the market believe it will happen, what if it proves true and you are only holding STA? Well nothing, you don’t have any exposure to it but if you held Delta you would get some benefit.
What many don’t realise is that when Delta broke $50, it wasn’t only STA that took it there, it was at the same time ETH broke through $400.
So when you buy/ mint Delta you are backing “two horses”
- Delta is a standalone asset
What I mean is that like STA, if there was a market order of Delta, the price would move.
It doesn’t matter what the STA and ETH prices are doing. At the time of the trade there is a certain amount of Delta in circulation. A trade influences the supply/ demand of the asset and the price changes.
It’s at this point where the arb opportunities are created and the rippling down of volume, this is a key feature and I’m by no means downplaying it. It’s just it’s not the only way Delta can be used
Point 1 above is amplified when you invest in the Phoenix Fund. It’s a mechanism to diversify a significant portion of your portfolio on assets that show promising long term growth.
You see the Statera isn’t only about speculating an individual digital asset, it’s about giving its users a portfolio management option.
You don’t need to hold ETH, BTC, Link, SNX and STA as individual assets. Like this you continuously have to manage your portfolio. Statera offers you the option to take the hassle and stress away from you. Not to mention the APY you get from both Delta and Phoenix that you wouldn’t get if you held the assets outright.
For an overview of the performance of all Statera you can read these financial reports
Thanks for reading!
It's the difference between the value of your assets in the pool and the value of your assets had you not pooled them and held them instead.
The Uniswap pool makes it so the dollar value of your pooled assets stays equal. Best way to see it is through an example.
1) Say you have 100 STA and 10 ETH which are both worth $1,000, so you're pooling $2,000. In this example the STA price is $10 and the ETH price is $100.
2) Now say STA price doubles to $20 (ETH stays the same). Your total pooled value is now $3000, Uniswap will balance the value of each asset so that it's $1,500 for each asset. The portfolio now 75 STA and 15 ETH
3) Now say STA doubles again to $40 (again ETH stays the same), from 2), you have 75 STA and 15 ETH (as Uniswap balanced them last time the price doubled) so STA value is 75*40=3,000 and the ETH value is 15*100=1,500, in total the value is $4,500. The liquidity pool balance these values again to $2250 each. At this point you own 56.25 STA and 22.5 ETH.
4) this is where the impermanent loss comes in, at the end of all this balancing you have 56.25 STA and 22.5 ETH, with a total wealth of $4500. If you had held your original assets you would have 100 STA and 10 ETH, with STA @ $40 and ETH @ $100 you would have $4,000 (in STA) + $1,000 (in ETH) = $5,000
The impermanent loss is the difference between the $5,000 (unpooled) and the $4,500 (pooled) values so $500
*Disclaimer: there could be other tradable liquidity assets but none that I am aware of