/biz/ - Business & Finance

Spoon feeding

Let’s assume that for one day every cryptocurrency stays flat except ETH. What would happen?

1. 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

2.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

3.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.

4.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.

5.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.

now think there is zero chance that ETH is the only asset to move in price for the day. THEY WILL ALL MOVE.

Now think how many indexs Statera will be putting out.

Now think how many indexs Statera will be putting out on platforms like balancer (yes balancer will not be the only one.

Multiple indexs on multipls platforms different pools using the Delta coin.

STA will be the most used coin in Defi soon.

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TL:DR for the mentally impaired annons.

In simple terms the Burn function of STA is designed to create volume. In a way Statera discovered "Volume farming"