/biz/ - Business & Finance

>>25129963

>>24960929

>>24863175

>>24818313

>not buying the project with the highest quality memes
stay poor cuck

>>24761573
KING of defi

>>24687174

>>24580684
>>24580720

>(2/3)

Now we can talk about STA’s utility: why would people demand STA? What does it do?

Balancer gives back a return of 1% of total transaction volume that happened from all the rebalancing. 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 a scam because they were THAT high, but it has nothing to do with scams… it is 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.
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 too (which by the way means more STA is burnt).

The Balancer also balances liquidity / fee income demand: if liquidity provider believe they can get higher interest in other defi, they will remove their liquidity from Balancer. But then this leads to an increased fee income to those who have not removed their liquidity (MINDFUCK). Keep in mind all this burns STA as well.

>>24572312