The Stabilize Protocol is a decentralized finance application designed to help keep stablecoins prices stable by using active strategies that arbitrage over multiple exchanges and by providing liquidity to protocols that support stability. With Arbitrage, users earn from price fluctuations between tokens, whether the market is in bull or in bear. The protocol can be utilized on both Arbitrum, a layer 2 solution for Ethereum and Binance smart chain network.
As we enter the protocol’s year 3, we have noticed that Stabilize is one of the few DeFi protocols still operating from 2020 with a decentralized bot network. 2022 was an eventful year and we will preview what is to come for the protocol.
General consensus, 2022 was a tough year overall
For cryptocurrencies, 2022 was a year that saw several large players exit the markets due to losses and bankruptcies. Macroeconomic factors triggered general bearish movements in crypto which caused cascading sells and collapses for vulnerable protocols. Fortunately, due to the nature of Stabilize, depositors underlying balances were unaffected by such actions as automated contracts managed user funds, not teams. TVL (Total value locked) decreased but what was there was still utilized for the benefit of the protocol.
While there were many changes made to the protocol, such as the deprecation of REETH via governance vote, removal of Stabilize Swaps and switch to Arbitrum, these changes were made to make the protocol better and more focused for the user experience. For any major changes, there is always an attempt to communicate to the users with enough time to act. But as this is still a developing protocol, it is important to contribute and read the updates on a regular basis.
Looking forward to 2023
The flagship offering of Stabilize has been its active arbitrage strategies among major stablecoins (USDC, DAI, USDT, BUSD). As volatility and revenue has generally decreased on-chain due to increased competition with private pools, we look towards stabilizing more exotic collateral backed stablecoins that launch on both Arbitrum and Binance Smart Chain (BSC).
In addition, Stabilize also features strategies that support stability of stabilizing stablecoins via liquidity providing (LP). This is more similar to a traditional DeFi yield aggregator. While there is not a desire to replicate existing successful models, Stabilize will add new yield aggregating LP pools if it unique and provides a benefit to the stablecoin sector.
Finally, as mentioned in the new zsb-BUSD strategy for BSC, there is opportunity for providing liquidity to stablecoin pairs with pseudo-delta strategies. Stablecoin pairs already tend to present minimal IL risk, however it is possible that one of the tokens will break its peg. With the zsb-BUSD strategy, if the experimental token breaks its peg, depositors may actually gain due to the intrinsic short position created in the strategy to form the LP token. We hope to find more opportunities to build strategies like this for Arbitrum and BSC.
A reminder on STBZ and STBB tokens
As mentioned previously but is needed as a reminder, both STBZ and STBB tokens have no intrinsic monetary value. By earning these tokens from the protocol or buying these tokens on the open market, the only expectation from having STBZ is to contribute by creating governance proposals and voting on those proposals. STBB can be staked into strategies to earn BNB. Learn more that here.
The team did not sell these tokens to users for shares and the team does not earn money from users when tokens are bought. There is no fiduciary duty for the team to increase or maintain the price of these tokens. The team does not directly influence the price of the token on the open market. The team is more focused on developing protocol strategies that generate real yield and making the protocol more autonomous.
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