Comments Off on A Uniswap Pool Token Now Tracks an Index Fund on Balancer
Nuts, or the new banking system? A project has incentivized liquidity provisions in a Uniswap ETH/STA pool with a token.
That’s the Delta token, DLT. This is now part of a pool in Balancer which has five assets in it: Delta (40%), wETH (30%), wBTC (10%), SNX (10%), LINK (10%).
Now we have a Balancer Pool Token (BPT) which is literally a tracker for the above index. And so we create an entire ecosystem.
The above apparent complexity shouldn’t deter you from the simplicity of this ecosystem within the bigger ethereum decentralized finance (defi) space.
First there’s Statera (STA) which seems to have a complex history. It began as a simple deflationary token where 1% of each transaction is burned.
Therefore the token was called burn. Then there came some project called Shuffle Token, and they thought to copy it with Ash.
Since so far they were very original, with the history of this team apparently beginning just last year, they discovered were greeted by Balancer which itself launched only this February.
So comes STA, with this being the genesis of this whole ecosystem and by itself being a simple token where 1% of a transaction is just burned.
Does this deflate until zero, we wondered, with a seemingly anon team member that goes by Derelick stating:
“Theoretically yes. In reality no, it’s an asymptote so as it nears zero it begins slowing and could reach zero at infinity but at that point we’ll all be dead anyways.”
Unless we beat entropy of course, something Musk may help with especially as this team is rumored to have South African origins.
It’s unclear how this STA token came to market, but the team claims devs kept only 4% and etherscan’s holders distribution seems to show this is a very distributed token indeed.
There were numerous attempts by this team as it went through trial and fire in regards to this token, with a hack so happening in this frontier. As they tell it:
“A flash loan was able to exploit the smart contract on Balancer. Statera and Balancer agreed to refund users.
Statera made their platform more secure by putting Statera in a Liquidity pool and then putting that liquidity pool token (named Delta) in a Balancer.
It is now secure and is a new way of yield farming in Balancer (you get yield on the balance pool and yield on the delta token).”
The New Frontier
To try and understand what’s going on here we have to try and understand this new invention of liquidity pools and to understand that, we have to understand what on earth is a no order book exchange.
Well, it’s the answer to SEC’s Jay Clayton who said you can’t have a decentralized exchange because the order book has to be somewhere. Well, it turns out it doesn’t.
That’s through balancing assets within a pool, which in Uniswap is basically a trading pair in this case eth/sta, so that they’re 50/50 in line with the market price of the assets, the 50/50 bit so being met by bots, arbitragers, the market basically.
Thus if you have only 1 eth and 1000 dai in total in this pool, that’s a nice doubling+ for arb bots, who 50/50 it to be 1 eth and 430 dai, the current price of eth in usd.
Obviously the more assets in this trading pair pool, the less arbing volatility, the more you can buy in fixed blocks of say 10,000 eth for $400 without slippage, the more useful it becomes, and the more a disruptor to the point Uniswap is handling more volume than many established traditional exchanges.
In this case they’ve gone further. Instead of the liquidity providers just taking some of the pool fees, which are like exchanges fees, they also get a delta token for the eth/str liquidity provision to the pool.
Balancer is like Uniswap, but instead of 50/50 two assets, here they equalize numerous assets based on price actions so that in this case if wBTC rises a lot while eth doesn’t move, this pool automatically does wBTC profit taking and puts them into eth as well as the other assets like snx and delta in this case, with 50% of delta being the Uniswap’s eth/str, meaning they putting it in str as well, so burning this deflationary token.
One thing stands out for this pool and very loudly. We have a plain ethereum address. That being the eth/sta contract address for the Uniswap pool.
That means Balancer is permissionless. Anyone can add anything and can combine all things in all ways they please, hence their disclaimer when we visited this pool:
“This could be a risky pool as it contains one or more tokens outside of our whitelist. A liquidity pool is only as good as its weakest token. If the token gets blacklisted, infinitely minted, or exploited in any other way, the pool value can go to 0. Balancer Labs is never liable for losses that happen using our UI or Balancer protocol. Slow down and do your own research!”
On that note, we know pretty much nothing about this team, and we haven’t looked at the code as that is someone else’s job, but we’re told they were audited by Hacken, who we don’t know much about either.
They also say their code has not been hacked, with there apparently previously being some problems with Uniswap and Balancer which have been fixed, and they say this STA contract has no onwer.
A Mess or Genius Land?
It’s difficult to not be a bit impressed by their whitepaper, with this team cute enough to provide financials. Hinting perhaps somewhat clearly why they might not want names to their code.
The Nakamotos, and whether they are or not time will tell, but scruffy while touching higher levels, walking on fire while keeping feet cool, either Mark Karpeles or Nakamoto.
With us able to say little about much regarding this project as far as code or credentials, but the idea of stratas and doable by anyone, is at least curios.
The idea so being say Trustnodes launches a TN token (yeh simpler times), now we can create an eth/tn pool on permissionless Uniswap to give it a market and to incentivize it we can put that pool in an index, which if we wanted to we could manage as we please, and then our management of that index so feeds back to tn to provide hopefully some profits from index management on top of some silly token we might give you for a subscription.
Add to this the new German law on e-stocks, and this tn token on a uniswap pool indexed on balancer suddenly also gives you actual ownership.
Why stop there, these coders said. Let’s have a token for the balancer pool itself, but instead of this being tradable, this is an actual bearer asset of the assets in the pool in as far as BPT is proportionally exchangeable for the assets in the pool and your portion of those assets in the pool become BPT.
To answer our own question however whether this is a mess or genius, we can’t. Only time can. Yet, a new dawn is clearly here for the scanned pages on a 1995 internet site are giving way to the strengths of natively digital ‘sites’ that nowadays dominate much of the stock market and are beginning to be born in the crypto land as well.