Standard Protocol is the first Collateralized Rebasable Stablecoin (CRS) protocol for synthetic assets that will operate within the Polkadot ecosystem. It is also the first and only project from Korea to be awarded a Polkadot Web3 foundation grant and prides itself on its global community growth approach. What is Standard Protocol (STND) | What is Standard Protocol token | What is STND token
In this article, we'll discuss information about the Standard Protocol project and STND token
Standard Protocol is the first Collateralized Rebasable Stablecoin (CRS) protocol for synthetic assets that will operate within the Polkadot ecosystem. It is also the first and only project from Korea to be awarded a Polkadot Web3 foundation grant and prides itself on its global community growth approach.
We implement a hybrid mechanism for stablecoin minting and include a new paradigm for liquidity aggregation. In contrast to previous generations of algorithmic stablecoins, Standard rebases its stablecoin supply in each era and will act as the catalyst for the financial activities of other parachains by enabling leveraged trading and arbitrage participation via a built-in AMM. Standard will also include a protocol for synthetic asset markets, utilizing decentralized oracles.
Most cryptocurrencies have volatile prices, making them difficult to use as a medium of exchange. For example, if Alice owns a bakery and is selling bread for $1, it’s risky for her to accept payment that can fluctuate +/- 20% a day, especially if she needs at least $1 to avoid defaulting on a loan or rent. Hence, Alice is better off only accepting more stable currencies like fiat (i.e. legal tender issued by a government and regulated by a central authority).
Here’s where stablecoins come in — stablecoins are a type of cryptocurrency designed to maintain a fixed price by being pegged to a stable asset like the U.S. dollar (USD). This means that people, like Alice, can now accept and hold cryptocurrency (in the form of stablecoins) without worrying about price volatility.
Stablecoins deserve some credit for the recent cryptocurrency boom as they lower entry barriers for crypto investing. If Alice is a trader, it no longer matters when she converts fiat into crypto (the first step to investing) because by purchasing stablecoins, she knows that the value of her funds will not change. Further, when Alice closes a successful position, she can rest assured knowing that her profits are locked in.
While this sounds like a nice perk to traders, stablecoins can have benefits for everyone. In countries such as Venezuela, where the average inflation rate in 2020 was a staggering 6,500%, it doesn’t make sense for workers to hold onto their hard-earned cash. Purchasing stablecoins that are pegged to lower-inflation assets serves as a solution for retaining the value of their day-to-day earnings.
There are 3 main types of stablecoins — fiat-collateralized, crypto-collateralized, and algorithmic. Let’s take a look at how they work (at a basic level) and some of their major flaws:
Fiat-collateralized stablecoins are backed by legal tender held in centralized reserves. Tether (USDT), the first successful stablecoin launched in 2014, is one example. If Alice sends $1 to Tether, she receives 1 USDT, which can be traded in pairs with other cryptocurrencies and converted back to $1. In essence, Tether issues IOUs that are guaranteed by USD stored in its bank accounts.
As Tether grows at an exponential rate, it becomes understandably more tempting to misuse funds or to mint USDT without having the necessary 1:1 reserve levels — after all, a black swan event where Tether is short in reserves becomes less likely as the demand for USDT explodes. Hence, we could see more scenarios unfold like in 2018, when Tether transferred ~$750 million of reserve deposits to its sister company Bitfinex without notifying token holders (this loan has since been repaid).
This ultimately raises questions about the credibility and transparency of ever-growing fiat-collateralized stablecoins, and more resources will need to be exhausted in order to independently audit reserves.
Crypto-collateralized stablecoins are backed by other cryptocurrencies and allow for holders to create leverage. Let’s look at the following example using MakerDAO’s Dai:
Bob is bullish on the price of Ethereum (ether), which today sits at $1000. He currently has $3000, so he can only buy 3 ether.
Here’s where leverage comes in:
Under the MakerDAO protocol, Bob can use his 3 ether to borrow Dai, a stablecoin pegged at a 1:1 ratio with USD. Because the collateral (ether) is volatile, Dai is over-collateralized, meaning that the ether should always be worth more than the Dai issued.
Credit: Cyrus Younessi
If the collateralization ratio is 150% (ratio of maximum collateral to issued Dai), Bob can borrow 2000 Dai and use this to buy 2 more ether — the only catch is Bob must repay the principal with interest. If Bob is right and the price of ether jumps to $1500, his portfolio is worth $7500, and after repaying 2000 Dai at a 1% interest rate, Bob is left with $5480.
But what if Bob is wrong and the price of ether drops to $500?
Bob’s collateralized debt position (CDP) is monitored by a smart contract that uses oracles to check the price of ether. With a 125% liquidation ratio (liquidation price of $833.33), Bob’s ether will be auctioned off to cover his debt.
While this might sound like a good way of amplifying profits (and losses), crypto-collateralized stablecoins have their weaknesses — mostly stemming from their tendencies to aggregate power among small groups of governance token holders, instead of democratizing profit-making opportunities for all community members.
For example, governance token holders could open large CDPs and collude to pick oracles that report highly inflated prices of collateral coins. This would allow them to issue more stablecoins, causing their price to crash and triggering emergency shutdown (a worst-case scenario of halting all operations and reimbursing stablecoin owners) — all the while, the governance token holders realize the gains from the stablecoins they dishonestly generated.
Looking at MakerDAO, we see that these conditions are not always satisfied; in March 2020, liquidators withdrew $8.32 million for 0 Dai by exploiting “zero bid” auctions. Further, because only governance token holders can usually enter auctions, the concentrated groups of people that possess the most of these tokens have better shots at winning, leading to a plutocracy and potentially discouraging new members from participating in arbitrage opportunities.
The decentralized nature of MakerDAO can further be questioned as it accepts USDC, a centralized stablecoin, for collateral. While governance may argue that this brings price stability, minting Dai based on centralized collateral is, nonetheless, antithetical to the whole concept of decentralized finance.
Algorithmic stablecoins are not backed by any collateral and instead employ an algorithm to manipulate circulating supply in order to maintain a target price, often $1. Here’s a simplified example using Ampleforth (AMPL):
Alice trades $1 for 1 AMPL. Shortly after, Bob and his friends also buy AMPL.
Ampleforth’s algorithm adjusts its supply every 24 hours — creating more tokens when price increases and removing tokens from supply when price decreases. If the price of AMPL jumps from $1 to $2 as a result of increased demand from Bob and his friends, the algorithm will increase supply so that Alice ends up with 2 AMPL each worth $1 (desired price).
While algorithmic stablecoins offer transparency and auditability, they lack price stability as, unlike fiat or crypto-collateralized stablecoins, there is nothing backing these tokens. This suggests that purely algorithmic stablecoins only work when people believe in them; one could even argue that this resembles a pyramid scheme where low prices are justified by the promise of future growth, but that growth must be subsidized by new participants buying into the scheme.
If the whole premise is that people will believe in the “system” and participate to recover the price of an algorithmic stablecoin, this doesn’t make much sense because in times of extreme volatility, people tend to lose confidence in the market. More specifically, if selling pressure is maintained during a bear market or flash crash, this could cause further panic and selling, triggering a death spiral and resulting in a complete collapse.
By developing a new model — a hybrid of a collateralized and rebasable stablecoin — Standard Protocol solves these problems while offering even more benefits than existing stablecoins.
Standard Protocol operates on a 3-token ecosystem:
Meter (MTR), Liter (LTR), Standard (STND)
Standard Protocol 101:
Alice has 10 Polkadot (DOT) and wants to leverage her assets, so she puts her 10 DOT in a Standard Protocol vault and generates MTR. If Alice is bullish about DOT, she can use her MTR to buy more (realizing further profits), and even in bearish market conditions, Alice can still earn a profit by purchasing discounted liquidated assets via Standard Protocol’s AMMs. Every time Alice executes a transaction through an AMM, she must pay a small fee, which goes to LTR holders (who, in general, are also rewarded for providing liquidity to the decentralized exchange).
Hence, MTR and LTR holders work together to create a community where people can maximize profits by leveraging assets and participating in arbitrage opportunities. As this community grows stronger, STND holders also benefit as more transactions = more staking rewards and fees.
Here’s how Standard Protocol solves the problems with current stablecoins on a case-by-case basis:
The whitelist event consists of 2 rounds:
We will also be giving out _**_100_ whitelist spots at our _AMA events — _**_so make sure you attend!
Before we start, please keep in mind:
You can only apply for _**_ONE_ round and only win a maximum of _ONE**_ whitelist spot — if you apply to more than one round, you will lose your opportunity to be whitelisted. Our team will filter for any signs of bots or duplicate accounts._
Regardless of what round you participate in, please complete these following tasks:
In order to be eligible for a round, you must fill out the corresponding whitelist form:
The Standard Protocol team has a zero-tolerance policy on cheating and will carefully monitor for valid ERC-20 wallet addresses (no bots!) and for completion of all tasks.
Please stay tuned for further updates, and please stay safe and be conscious of scams. You can find our official accounts linked at the bottom of this post or on our [Linktree_](http://linktr.ee/standarddefi) — please only refer to these verified channels. Happy whitelisting!_
Target: USD $325,000 equivalent Launch price: USD $0.25 Vesting: 100% unlock on TGE Max allocation: USD $500 IDO will proceed on a First-Come, First-Served (FCFS) basis until the USD $325,000 hard cap is reached Exchange addresses will not be accepted, only personal wallets with ERC-20 addresses
You will have to first buy one of the major cryptocurrencies, usually either Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance (BNB)...
We will use Binance Exchange here as it is one of the largest crypto exchanges that accept fiat deposits.
Binance is a popular cryptocurrency exchange which was started in China but then moved their headquarters to the crypto-friendly Island of Malta in the EU. Binance is popular for its crypto to crypto exchange services. Binance exploded onto the scene in the mania of 2017 and has since gone on to become the top crypto exchange in the world.
Once you finished the KYC process. You will be asked to add a payment method. Here you can either choose to provide a credit/debit card or use a bank transfer, and buy one of the major cryptocurrencies, usually either Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance (BNB)...
Step by Step Guide : What is Binance | How to Create an account on Binance (Updated 2021)
Next step - Transfer your cryptos to an Altcoin Exchange
Since STND is an altcoin we need to transfer our coins to an exchange that STND can be traded. Below is a list of exchanges that offers to trade STND in various market pairs, head to their websites and register for an account.
Once finished you will then need to make a BTC/ETH/USDT/BNB deposit to the exchange from Binance depending on the available market pairs. After the deposit is confirmed you may then purchase STND from the exchange: https://www.polkastarter.com
There are a few popular crypto exchanges where they have decent daily trading volumes and a huge user base. This will ensure you will be able to sell your coins at any time and the fees will usually be lower. It is suggested that you also register on these exchanges since once STND gets listed there it will attract a large amount of trading volumes from the users there, that means you will be having some great trading opportunities!
Top exchanges for token-coin trading. Follow instructions and make unlimited money
Find more information STND
🔺DISCLAIMER: The Information in the post isn't financial advice, is intended FOR GENERAL INFORMATION PURPOSES ONLY. Trading Cryptocurrency is VERY risky. Make sure you understand these risks and that you are responsible for what you do with your money.
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