Stabull Project Updates & Industry Insights July 2024
Executive Summary
Stabull continues to make significant progress towards our goal of democratizing interest rates and providing robust infrastructure for stablecoins and Real World Assets (RWAs) in the crypto space.
Development & Launch Highlights:
– Product development is on track, with DeFi vaults (the smart contract-based systems that automatically manage and optimize assets to generate yield) nearing completion.
– “Vaults” feature allows users to stake LP tokens and participate in the Liquidity Mining Program.
– Vaults are a few days from going live – Currently finishing audits.
– Liquidity Mining Program design finalized, addressing token distribution concerns pre-TGE. Meaning when the Liquidity program is live, APY will show 0% but all early stakers will be rewarded with a post TGE airdrop for providing early liquidity. This is a way to ensure no governance tokens circulate before TGE for a fair & clean launch.
– Additional liquidity pools being added including Digital JPY (GYEN), Brazilian Digital Token (BRZ) and StraitsX Singapore Dollar (XSGD). We are adding new partners/pools regularly now.
– Partnerships for exchange listings and user acquisition campaigns are being finalized in preparation for launch, while most of the market making, launchpad, user-acquisition, KOL, PR/Media partnerships have been finalized.
– We’ve engaged with 20+ stablecoin issuers, 30+ RWA issuers, and 20+ neobanks (out of perhaps 1,000). This has also given us great visibility across the entire RWA/Stablecoin industry globally – more on that below.
Market Sentiment:
– Market conditions have been choppy for Bitcoin while it consolidates below previous all-time-highs. Altcoins since mid March, experienced drawdowns & capitulation not seen in previous mid-bull cycles. We made the right decision not to rush TGE before the current negative altcoin sentiment flushes through the system.
– Bitcoin remains structurally bullish, with a target of new ATH by Christmas 2024.
– Shift towards quality projects and away from meme coins is becoming apparent since last week.
– Growing adoption of stablecoins, particularly USD-based, driven by inefficiencies in traditional financial systems continues unabated.
– Increasing interest in non-USD stablecoins and RWAs presents opportunities for Stabull’s infrastructure.
The Stabull Vision:
- Democratize interest rates & shift power to users over time.
- Providing efficient, low-cost ‘bedrock’ infrastructure for stablecoins and RWAs.
- Empowering users with self-custody and transparent, on-chain liquidity.
- Supporting the growth of the entire stablecoin and RWA ecosystem.
- Offering a viable alternative to traditional financial infrastructure like SWIFT and the London Bullion Exchange.
We are positioned at the right time and place to capitalize on the biggest trends in crypto: Stablecoins and RWAs. Our unique vantage point in the industry allows us an informational advantage to adapt our strategy to best serve the evolving needs of this fast growing market..
———————————————————————————————-
More on Market Analysis, Market Cycles and Liquidity
The current market cycle differs significantly from previous bull/bear cycles:
Bitcoin remains structurally bullish despite altcoin struggles. While BTC has entered the Big Leagues with the addition of ETFs, nation-state mining, and the courtship of billionaires such as Michael Dell, anticipated large volume sales from the German government and Mt. Gox need to clear before clarity of direction can reestablish itself. Once cleared, we anticipate BTC to solidify at new ATHs by Christmas 2024.
Furthermore, evidence is emerging that BTC will fully decouple from its prior status as a speculative tech stock into a genuine store of value.
The breakout in Bullion (after a 25+ year consolidation period!) coincides with the decline in the PetroDollar just as the BRICS+ nations are expected to convert trade and settlements to non-USD, bullion-backed fiat currencies for energy, defense, and agriculture. BRICS non-USD trade increased by over 20% in the past 4 years alone.
The relevancy of this global restructuring should materialize over the next 12 months when Bullion, BTC & “blockchain rails” comes into full focus via live scalable adoption by major nations. Bitcoin is an inflation/geo-political hedging tool and realistically needs 4-12 more years to completely overtake the traditional historical role of gold.
As the November U.S. elections draw near and Fed policy remains unclear, the general expectation is for stocks to rise and non-dollar fiat currencies to fall under extreme pressure. However, a highly reactive Fed policy, featuring a quick succession of rate cuts, could upend the fabric with an influx of Keynesian-style digression.
None of these geopolitical macroeconomic events are negative for Stabull, whichever way they unfold. The unstoppable theme is that trading is moving ‘on-chain’ and the Stablecoin / RWA industry is coming out of the lab and into the wild next year.
Memecoin Phenomenon and Industry Reflection
The rise of memecoins at this point in the cycle is unprecedented and seems to reflect broader societal issues. Prior to this, the popularity of memecoins has been an indicator of late cycle tops, leaving the market curious as to whether this is an outlier or an overall indicator that memecoins are irrelevant with respect to direction. This time around, memecoins added an unprecedented rise shortly after the BTC ETF approvals, and degenerate “attention economy” activity led to multiple memecoins exploding onto the scene.
Initially, low barriers to entry created market saturation, which in and of itself was caused by a desire to pursue fast, cheap, and easy money that lacked utility. This was always unsustainable and we are not surprised at the liquidity leaking out of meme coins since Mid March.
By contrast, the “DeFi Summer” of 2019 resulted in many practical applications, or Altcoins, that survived into the 5th Epoch; such as AMMs, decentralized borrowing/lending, and other core financial infrastructures. The past 6 months, however, have not offered conclusive evidence that a true Altcoin cycle has arrived.
Macro Business Environment
Presently, Central Banks, with the exception of Japan, are under pressure to shift from the quantitative tightening policies of the past two years to some form of easing that will restore comfort to balance sheets across the commercial, investment bank, and regional banking structure.
Essentially, global markets are coping with a collapse of confidence associated with long-term zero interest rate policy, and the added pressure of trillions of dollars of stimulus subsequent to the onset of the Covid crisis. The resulting cost of living crisis from aggressive rate hikes has heavily impacted the middle class. Moreover, reactionary policies that sprang from the crisis, such as mandates, business closures, employment terminations, the increase in personal debt, the rise in inflation, and personal consumption expenditures has brought many Western nations (and China’s banking, finance & construction sectors) to the brink of a civilization crisis.
Geopolitical instability and regulatory challenges have also affected the crypto industry. Wires have been frozen due to frivolous de-banking. The disappearance of some vendor staff has disrupted the regular flow of B2B dialogue in companies exposed to contentious hotspots. An unclear regulatory framework from the SEC, and an absolutely insane compliance burden has resulted in only a few “blessed” corporations able to enter the market.
Given the unwinding of GBTC, the BTC sales from the German government, and the pressures building from the anticipated Mt. Gox sales, juxtaposed with the desire for Stabull.Finance to launch into favorable market conditions, it’s worth carefully considering the timing of our anticipated TGE.
Driving this consideration, the industry is in the process of cleansing itself from zero-utility memecoins. At this time, the Stabull team would prefer to launch into a phase of early market strength, rather than chop and weakness. Yet we are confident the market is on the cusp of strengthening, and our preparations and tactics will help us weather any potential short-term storm.
Again the global trends do not affect Stabull’s Product-Market-Fit or path-to-market, but are more a liquidity / timing considerations for a favorable launch.
Reminder: What is Stabull’s Vision?
We have a unique opportunity to democratize interest rates in FX & Commodities markets. .
We are doing this via addressing the “Missing Infrastructure” in our industry – a capital efficient decentralized Swap facility with near-instant and total finality in clearing & settlement.
- Designed specifically by and for Stablecoin and RWA issuers.
Providing a simple user-interface to swap or earn yield for all user types.
Providing a simple user-interface & competitive design for voting on interest rates and key governance concerns.
This aligns with newly emerging macro-economic policy shifts. We are seeing widespread talks/proposals by many nations to reduce/abolish income tax & finance government spending with Tarifs / consumption tax instead.
– In the world of FX & Commodities, $STABUL is on a path of progressive decentralization, where in our final form (2025), holders will be able to compete / vote on what the interest rates will be for their preferred assets. ie the power moves back to the consumers of utilities.
Game Theory and Liquidity Attraction
- The more liquid, the larger & frequent (velocity of money) swaps can be.
- The larger & frequent the swaps, the more transaction fees.
- The more transaction fees, the more APY.
- And the Governance token $Stabul gamifies the APY via healthy competition.
Stabull has embarked on a path of progressive decentralization in a way that allows token holders to influence rates through competition and voting on how yield should be allocated on their preferred assets; thus shifting the power & function of utility back to consumers.
– The GameTheory is simple at such a 40,000 foot view, but needed careful thinking through each stage of Stabull’s projected lifecycle & we brought in some great minds to model all this out.
Theoretical endgame example:
Given a mid-sized money market fund, assume you have $100m to deploy, with a mandate to earn a minimum of 6% APY, and you deploy into a USDm/USDc pool on Stabull (which is not live yet).
If USDm (https://mountainprotocol.com) accounts for 50% of the pair, with 5% already embedded (Fed Funds currently 5.25%) the result is 2.5% APY on $99m capital deployed with zero FX risk, considering the fact it’s a USDm/USDC pair.
By adding liquidity, the LP automatically enters into the Stabull liquidity mining program that targets say 6% APY (collectively equal to 8.5% APY). With the remaining $1m, the liquidity partner buys $1m of $Stabul to gain the voting power required to increase APY in the USDm/USDc pool from 6% to 10% for the subsequent quarter, leaving an outcome of 12.5%.
Once the initial investment of $1m used to buy voting power is subtracted, the overall return is 11.5% APY. However, the LP still maintains capital value from the initial purchase and is allowed to vote on the structure for the following quarter.
Essentially, there is a strong incentive to gain (purchase) voting power in order to increase APY, particularly when the cost is just 1%.
This scenario becomes realistic while also:
– Avoiding possibility of failure-to-deliver.
– Self-custody is maintained.
– Allowing for insurance against hacks/exploits (Stabull pushes 5% of all transaction fees toward an insurance pool).
– No lockups/cool down periods on redemptions to LP’s.
– Achieving total finality & settlement of any swaps plus transparency because liquidity is on-chain
Building the strategy outward, Stabull intends to incorporate 3rd party Neobanks, borrowing/lending protocols, and even centralized fund managers that bring structured income products, or SDR-style basket/index products that can auto-rebalance programmatically by tapping into Stabull’s liquidity.
Real-World Asset (RWA) and Stablecoin Industry Insights
– We have engaged with 20+ stablecoin issuers, 30+ RWA issuers, 20+ neobanks.
– There’s a growing trend of fiat-to-stablecoin conversion for various use cases.
– While adoption is slower, adoption of non-USD stablecoins is improving & expected to increase substantially in the coming months. .
– The main challenges at stake for attracting tokenized commodity markets (e.g., gold, silver) involve their relative “newness” to the idea of dynamic stable swaps. Yet fruitful talks are underway with commodity, treasury, private credit, and real estate-backed platforms.
– As a result, we anticipate significant RWA growth in 2025.
More specifically:
- RWA’s are a big theme right now and the sub-sector has received healthy funding from the likes of BlackRock’s BUIDL Fund down to individual seed investors. It reminds us of 2016 VC & private funding into DeFi infrastructure.
- Many projects have issued assets on-chain; but the liquidity is on many chains. Some have everything on Stellar, moving to Ethereum / Polygon. Some are on Avalanche moving to HashGraph. So on and so forth.
Stabull’s position is that homogenizing best practices, standardizing technology choices / chains is a necessary process the industry is going through.
We as a bedrock infrastructure provider will integrate any chain & load any pool, so long as partners provide initial liquidity & marketing.
We do expect within 12 months for liquidity to concentrate between 2-3 chains.
Product & Business Development:
– “Vaults” feature nearing completion.
– Liquidity Mining Program design finalized.
– Additional liquidity pools on Ethereum and Polygon will be added in the next few days and will be visible on the dapp.
– In dialog with 4 other chains for strategic integrations. Most are tri-party arrangements between ecosystem funds, RWA/Stablecoin issuers + their liquidity partners.
– The Liquidity Mining program going live will allow us to move forward with a variety of user-acquisition, brand-awareness & social campaigns.
Stabull’s core KPI’s are simple: TVL & Swap volume. We’re only just getting started.
We will switch our focus to the public sale / launchpad programs at the end of July in Prep for TGE.
Token Generation Event (TGE) Planning:
– As mentioned, we are carefully considering the timing and market conditions to extract the best outcome for Stabull’s TGE.
– Without naming names, we watched a cool DEX project run up 100m TVL, gain 200k + X followers and spend over $1.5m on Bybit & other large listings, KOL’s, media etc and the result was opening price was 1/10th of their pre-sale price. One of many High FDV/low float VC projects launched with similar results in the past 4 months..
– By comparison Stabull will be a tiny $2.25m MCAP, a low FDV/high float on day 1 with no predatory VC’s & a balanced token distribution.
Future Outlook:
– Positioning Stabull as a top 10 DeFi brand.
– Offering an alternative to SWIFT and London Bullion Exchange.
– Supporting growth of the stablecoin and RWA ecosystem.
– Commitment to frequent updates and transparent communication.
– Coming out of development into launch July/Aug.
– Progressive Decentralization post TGE (DAO voting portals, utilizing HoloChain technology to decentralize front & back ends etc over the remainder of 2024 and H1 2025).
– More pools, more liquidity, more NeoBank & DeFi integrations on a regular basis.
The future is bright – and decentralized!
We appreciate your continued support as we work towards realizing Stabull’s vision of democratizing interest rates and providing robust infrastructure for the evolving crypto financial landscape. You can connect with the team on our Discord, or follow updates on X by following @StabullFinance or on LinkedIn by following Stabull Finance.
