So I’ve been thinking about this for a while, Statera has a unique value proposition and many can see the benefits it can bring but very few understand how it works. Which is what I’ve decided to write about it, I’m hoping that by the end of this post you will have a better understanding.
At this point I think it’s quite important to mention a few things:
- This article is in no way intended to give financial advice, it is vitally important that as an investor you DYOR (Do Your Own Research) and understand the risks of investing in any digital asset
- These views are my own and how I understand the ecosystem to work
- I have written this as an entry to the #MyStateraProject competition and the information included is as of 05 August 2020
- I don’t really write articles... at all, so if this doesn’t flow like that of a seasoned pro please forgive me :)
So you bought Statera… what now?
For most digital assets this is pretty much where the excitement ends. Yes, some have options to “stake” but that’s not really fun and most of those “assets” don’t do anything else. So by the time you cash out your stack size has doubled but the “asset” (I use “” as this isn’t really an asset, but the creators will tell you it is) is pretty worthless. Remember folks, 100% of 0 is still 0.
With Statera you have the complete opposite, once you buy STA you are only getting started. Let that sink in for a bit, once you buy the asset that is where your journey only begins! That’s the way it should be right, the beginning is the beginning, it's not the end… and lets be honest here, who wants to buy a digital asset and keep telling themselves to HODL (Hold on for Dear Life)?
So how is Statera different?
This is where the fun begins, as an investor, you have options. There are already a few available and you can pick and choose as many as you like! You can even change your mind as often as you like.
Sounds amazing right, well let’s look at the options and how they work, currently there are three official options:
1. You can invest in Statera outright
What does this mean – You have 100% exposure to what STA is doing. Any changes in the price of STA has a direct impact on the value of your portfolio.
What are the benefits – The only benefit is from STA price changes
Most likely to be held when - An investor thinks that STA is going to increase in value more than the rest of the market
What do you need to do – Nothing, once you have invested in STA all you need to do is manage it like you would most digital assets.
This link will help you Buy STA
2. You can invest in Delta
What does this mean – You have a dual asset exposure, 50% STA and 50% ETH.
What are the benefits – Your risk is now a bit more diversified as you have hedged your single asset exposure risk. This means that you are no longer only exposed to changes in the STA price, you also get exposure to the price movements in ETH all within the same asset. While all of this happens you are also earning fees as trades are booked
Say what about fees? – Yes you read right, you earn fees. By holding the Delta asset, you become a liquidity provider. The most common trading pair on Uniswap is an asset vs ETH, therefore every time a STA trade gets booked through the ETH pairing (either directly or indirectly) there is a fee that gets paid to the liquidity provider. Which is you :)
If you’re not sure what I’m referring to, the next time you book a trade on Uniswap, look just below the expected price impact for the “Liquidity Provider Fee”. Your ownership share of the liquidity pool determines how much of that fee you earn. You can kinda view earning fees as a slight twist on “traditional” yield farming.
Where can I see the fees and how are they accrued – The fees are generated each time a trade is booked and automatically gets added to the liquidity pool. As a result, your Delta asset goes up in value. At the end of this article I’ll add a link on how you can calculate your fees earned
Most likely to be held when - An investor wants to hedge their risk using ETH.
What do you need to do – If you are looking to invest in a Delta asset you can do it in two ways:
- You can mint a new Delta token which adds liquidity. You do this by adding both STA and ETH in equal portions to the pool. Unfortunately, from an investment point of view, this doesn’t work for everyone. Here is why, lets say, you spent $1000 on buying STA and in order to mint Delta you either need to sell half your stack for ETH or you need to increase your overall investment by “topping it up” with ETH. This is where, if you didn’t think about it clearly before buying STA you could find yourself over invested in STA in comparison to the rest of your portfolio. This doesn’t need to happen, like I said earlier, the ecosystem is all about choices
This link will help you add Delta liquidity
- You can buy Delta which transfers ownership of liquidity. Yes that’s right, Delta is a liquid asset and is tradable on both Uniswap and the Balance exchange. In the previous example where you bought $1000 of STA, you could just sell some of your stack for Delta depending on how you want to diversify your portfolio. How cool is that!
This link will help you buy Delta liquidity
3. You can invest in the Phoenix fund
What does this mean – You have exposure to multiple assets: 40% Delta, 30% wETH, 10% wBTC, 10% Link and 10% SNX. Because of Delta’s make up the pool is essentially 50% ETH and has 20% STA. Look how good that is, as an investor you are no longer exposed to one asset and your risk profile is significantly reduced. As an example, investing in a S&P 500 index fund gives you exposure to multiple assets and focuses on the entire index’s movement as opposed to a single stock. The Phoenix fund acts in the same manner in the digital asset space, the only difference, Phoenix has a deflationary element to it.
What are the benefits – Other than a more diverse risk profile, you earn fees and are eligible for BAL airdrops. The airdrops occur weekly (Tuesday) and is the reward issued by Balancer for providing liquidity to their protocol.
Most likely to be held when - An investor wants to diversify their portfolio without the hassle of trading all individual digital assets held within the fund, this is achieved through the one asset pooling option. There is also the added benefit that the fund will automatically rebalance to align with the predetermined asset weights so that you don’t have to worry about it.
What do you need to do – If you are looking to invest in the Phoenix fund just head to the Balancer portfolio page and add liquidity.
This link will help you add Phoenix Fund liquidity
The best thing about the above is that this is not a complete list of options. Statera is 100% decentralised, the options mentioned above are only those on the official website. There are other pools created by the community. So not only is there room to add more options, anyone can do it.
So how does it all pull together?
It’s at this point I realise that I haven’t addressed one key aspect. While I hope the above gives you an understanding of how the ecosystem works, I have not covered what makes is work.
I mean what would drive the trading volumes in STA, keeping those fees coming in and apply the upward price pressure that deflation brings?
As mentioned STA is deflationary and that 1% of every transaction is burnt. The basic concept of supply vs demand tells you that over time there will be inherent upward price pressure as the supply is reduced. It’s at this point where I can almost hear you say, “So what?” and “How is that any different from another deflationary coin?” You see, in my view it’s actually harder for a deflationary asset to be successful compared to its non-deflationary counterparts. Not only does it need a use case, it needs volume. The quicker supply gets burnt the better and this is where the ecosystem comes to life!
Let’s assume for one minute that for one day every cryptocurrency stays flat except for ETH (mental I know but stay with me for a few minutes). What would happen.
- The value of Delta will go up and the 50:50 ratio would be out of sync, ETH would need to be sold and STA bought to keep the locked in split. This causes STA to burn
- The Phoenix fund is 30% ETH and 40% Delta. It would then need to sell both assets and buy wBTC, Link and SNX to keep the predetermined asset weights. So now both Delta and Phoenix are back in balance, but it doesn’t stop here
- As Phoenix sold Delta there is a negative impact on the price, but the actual quantity of ETH and STA inside of it didn’t change after the point 1. As a result, it would be beneficial to unmint Delta to realise the full value of the underlying assets. This unminting process causes STA to burn. Something like this is generally done by arb bots
- But now as some STA has been burnt there is upward price pressure and the inverse of point 1 happens. STA is now sold to buy ETH, causing STA to burn. Initially this may not be significant but as supply decreases the impacts of this will get bigger
- Point number 4 means that the value of Delta has changed, which means Phoenix needs to sell Delta and so the cycle goes back to point 2
Please note, that the impacts of point 4 and 5 are probably too small to see this early in the project but it doesn’t mean it’s not happening.
What does matter is that there is zero chance that ETH is the only asset to move in price for the day. Now look at the 5 points I laid out and imagine all the assets move in price… mind blown!!
The higher the liquidity the higher the volumes it can generate.
What does it all mean?
The elegant thing about the STA ecosystem is that it is designed to create volume.
In recent times “Yield farming” has become a big buzz word… at Statera they have discovered "Volume farming"
Thanks for taking the time to read this and always remember as an investor always you DYOR and understand the risks of investing in any digital asset
Some additional useful links –
Statera website: StateraToken.com
Statera official telegram channel: StateraToken
Statera on Publish0x: Statera Project
Some videos about the ecosystem: STAvids
The profit calculator: Profit Calculator