As I saw plenty of “I don’t understand” pic related posts, I am going to explain it to you now in details. Forget about what it is being marketed as: index/deflationary/fund/etc… Call it whatever you want after you read the below.
Starting off with basics: market cap = supply x price
As an example for 5,000 supply at $2: $10,000 = 5,000 * $2
Whenever STA is traded between wallets, 1% gets burnt. Now let’s assume two things:
1- Volume of 50,000 STA gets traded, causing 500 STA to get burnt reducing the supply to 4,500
2- Ignore the demand/price force for STA’s utility (for now)
Since we are ignoring demand, the market cap will remain the same. This burn will therefore cause price to increase:
10,000 = 4,500 x p, which means price should theoretically be pushed to 2.22.
This price increase will cause the STA value in Balancer (or Phoenix) to increase, forcing the pool to rebalance. Rebalancing means selling STA and buying the other 4 coins to keep the percentages as initially agreed upon (50 ETH / 20 STA / 10 BTC / 10 SNX / 10 LINK). Now remember, selling STA will cause STA to be burnt again (supply decreasing), causing a ripple effect: the cycle will keep repeating itself at a decreasing rate, even if no further human-triggered trades happen.
Now we can talk about STA’s utility: why would people demand STA? What does it do?
Balancer gives a return of 1% of total transactions volume that happened from all the rebalancing. Remember, rebalancing does not only happen from STA’s ripple effect mentioned above, but it also happens when the other 4 coins move in price (which by the way means more STA is burnt). That 1% on volume does NOT mean you get 1% on what you are pooling. It means the following:
Example: if you are pooling $10,000 and there is a total of $100,000 being pooled, with a 24h rebalancing volume of $50,000, then you will receive = ($50,000 x 1%) x ($10,000 / $100,000) = $50. Your daily rate of return is therefore $50 / $10,000 = 0.005, which means an annual rate of return of 0.005 * 365 = 183%. People called Phoenix’s return as scam because they are high, but they are not a scam but actually STA’s genius.
A lot would be very happy with such return, making them want to pool. You would think that as the pool gets bigger, your portion of the reward gets smaller but remember that when people pool, STA is being transacted and burnt, causing the rebalancing volume to rise and therefore increasing the 1% total reward as well.
Now add to the above all the demand action from wanting to buy and hold or buy and trade.
P.S Props to the user who made nice STA pics
Oliver Robinson
This is great stuff, user. Thanks for taking the time. I bought my first Statera last week. I think it's time to join the pool. Am I right in saying that the higher the volume, the higher the fees?
Hunter Gomez
Thanks for the explanation user, it’ll help a lot of people get a better understanding on why and how STA has price appreciation built into it. STATERA TO INFINITY AND BEYOND. Stay woke 2020.
Owen Cook
Yes user, the higher the volume whether from trading or pooling, the higher the fees/rewards investors get from pooling.
Ethan Smith
An actually informative post on biz. Well done op
Dylan Evans
brainlet here
>EOW? >EOM? >EOY? >2021? >2022?
Jackson Butler
Cringe thread and sell signal. This hacked and manipulated shit will dump to sub 5 cents for sure
Jayden Moore
I dont understand what the pool is. Do you get payouts in that? Is it like staking?
