Shade Protocol — A Community Series: Multi-Dimensional
Article #3
author: VJ
Research says the average millionaire has seven streams of income. Any time you can capitalize on multiple sources of value simultaneously, that’s a clear win.
And it’s that same multi-source value delivery that makes Shade quite interesting as a token. In this piece, we will be exploring the many dimensions of value built into Shade. There are so many layers here it looks like an onion (and it might make you cry).
When we say Shade is multi-dimensional in its approach to creating value for holders, what does that mean?
Shade Earns Rewards
Minting Shade requires depositing sSCRT (or other IBC-enabled tokens like ATOM). This accomplishes a couple of exciting things. For one, it means that all Shade is collateralized and the value is real. This isn’t Monopoly money.
This deposited collateral sits on the balance sheet for the DAO. But it doesn’t just sit there in the treasury. Nope, it’s going to work for Shade holders. A 21-day unbonding period means that you’ll experience some welcome reciprocity in the form of ROI.
Synthesis (the balance sheet of assets) will have the ability, via governance, to actively leverage these assets. Actions like performing buybacks, token burns, or distribution of staking rewards are all possible through the governance process.
Shade Earns Arbitrage Rewards
If the concept of arbitrage is new to you, consider reading {The Economic Symbiosis of Shade/Silk}. But let’s say you get the basics. Well, there are two primary channels for market arbitrage in the Shade ecosystem.
The first is through individual users. You can hold liquid Shade and then convert between Shade, Silk, and other assets to cash in on any potential market opportunities. Undoubtedly there will be many who do so.
A second option though is just letting our friendly neighborhood bot do the work for you while your Shade is staked.
Shade stakers will automatically derive value from Sky (the arb bot). Sky floats around in Synthesis and makes magic happen (ok, not magic, just basic economics…). Sky uses the DAO’s assets to do arbitrage for you.
The Ability to Impact Governance
This one is pretty straightforward. When was the last time the US Secretary of Treasury called you up and asked for a proposal to help influence monetary policy?…
Crypto in general and Shade Protocol specifically, are rewriting the rules of money so that anyone who wants a voice can exercise it through decentralized governance channels. That means the opportunity to speak into things like the value index for Silk. The future of Shade is, in part, up to you.
Stabilizer Token Airdrops
Shade Protocol is building out an entire synthetic assets platform. Much, much more on that to come in a future piece. For now, it’s enough to say that each synthetic will be pegged to its real-world price. For example, S-Gold, S-BTC, or S-Tesla.
But this synthetics market will utilize the same stability mechanics that are built into Shade/Silk — and that means there is a stabilizer token (for example “s-Gold”).
When a new synthetic asset is about to drop into this marketplace, Shade stakers will receive stabilizer tokens via airdrop… Shut. The. Front. Door.
Traditional Staking Rewards
On top of everything already covered, Shade stakers will receive traditional staking rewards for staking their assets. (Meaning, stake your SHADE and earn X% APR of SHADE rewards while you are bonded).
For an asset that is already so multidimensional in creating value for holders, this is like the ice cream cake delivered after a six-course fine-dining experience.
Protected Scarcity of Shade
If it seems like there’s some economic intentionality in the approach to Shade, we certainly wouldn’t disagree. As much as the protocol values the stability and volatility hedge of Silk — that’s how much we value the scarcity and protocol utility of Shade.
While we aren’t ready for a full tokenomic unveiling, it is known that Shade has a cap of 10 million tokens. Scarcity is built into the supply.
And as the ecosystem grows, there are some economic commandments that have been etched into stone to ensure the value of Shade is optimized during that growth. Any new application must follow at least one of these rules:
- The application increases the scarcity of Shade
- The application grows Synthesis
- The application increases the utility of Silk
- The application increases the demand for Silk
Also, you will never, ever see a dilution of Shade’s value via a “new, special unique token” coming into the ecosystem. Not going to happen.
Fundamental to Shade’s minting process is avoiding non-collateralized inflation. In other words, if we have 10,000 Batman coins and the market price is $2, what will happen if we mint 5000 more? I could try to convince you that even though the supply is now 50% greater they are each still worth $2. But unless you are two years old, you probably won’t believe it.
Shade is different by design. To mint Shade, it means you’ve deposited collateral in the DAO that represents established value within Secret Network and the greater Cosmos ecosystem and the beautiful Internet of Blockchains that we all believe in.
So when we say that Shade “avoids non-collateralized inflation” it just means that any increase in Shade’s supply (up until that 10M hard cap) is the result of someone locking up collateral in the DAO.
Getting Ready for Shade’s Genesis
Once you grasp the breadth of value that Shade is generating and delivering to users… it is an exciting economic opportunity, to say the least.
Shade isn’t on the market yet. But the genesis event is close enough that you definitely want to keep close tabs on our socials and communications. Join the conversation on Discord, Telegram, and Twitter.
We can’t wait to introduce you to all of the opportunities that participation in the Shade Protocol ecosystem will deliver. This is just the beginning.
Cheers to that future :)
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