The blockchain and DeFi universe continue growing engaging more and more people every day. Nevertheless, what attracts most people is also what keeps others away. We are going to talk about volatility, inflation, stablecoins, and Redeemable, the new coin from Shareslake.
There has been a lot of noise regarding the continuous shifts in cryptocurrency and token values, and the majority of people, whether involved or not with this new technology, are aware of it. Nevertheless, there is still a reluctant majority that prefers to stay away from daily changes of 10% of their savings.
Stablecoins, among other things, are meant to solve this issue. Their peg to a traditional currency eliminates the wild fluctuations, allowing cautious people to jump into the crypto world. Nonetheless, stablecoins have the same undesirable trait as regular money: inflation.
Even if the price of a stablecoin is fixed, people will still be unable to preserve their wealth, because the stablecoin will lose value over time as a result of inflation, just as a regular currency would. Thus, stablecoins cannot be considered stable in terms of ‘real value.’
People are forced to lock their savings into investment products if they want to preserve their wealth, and it prevents the owner from using the funds. In order to preserve wealth while still being able to spend the money, Shareslake created the Redeemable coin. It’s the same thing as being inflation-protected without locking up funds.
Redeemable is backed up by a reserve. Users can fund the reserve to obtain RED or burn RED to get back their USD. The reserve relies on the most secure traditional assets (bonds and TIPS) to generate and accumulate interest. Unlike stablecoins, where the issuer takes such interest as profit, the Redeemable reserve accumulates it, increasing the total reserve value. Since the Redeemable supply remains unchanged during this process, each Redeemable’s backing increases, thus its value.
Redeemable is designed to adjust its value with the CPI (Consumer Price Index). The CPI measures the change in living costs. Using Redeemable one can expect to pay always the same amount of RED for a product or service, no matter how its USD price evolves due to changes in living costs.
Consider a $1000 bicycle. You may buy such a bicycle today for $1000 or 1000 REDs. By 2027, if there is a yearly inflation rate of 4%, the same bicycle will cost $1220. However, it will still cost 1000 RED, as the RED value would have changed in line with living costs.
Redeemable stands out for being ideal to maintain treasuries and cash reserves in an efficient way and aims to attract conservative people and institutions to the crypto world.
Shareslake was built as a Cardano-based network. It was the first Cardano fork ever, released on May 1st, 2022. That means Redeemable offers all the Cardano features but with a base coin that enjoys price stability and inflation protection.
Redeemable will also exist in other blockchain networks. Shareslake is building bridges to interconnect the network with other ecosystems and provide them with Redeemable advantages, starting with Cardano.
Shareslake and Redeemable were built to serve as the base for upgrading the traditional stock markets, making them more open, transparent, and accessible, and it follows a special mindset of helping small and medium size companies to grow by providing extra funding.
A new kind of stock market with unlimited potential is being forged by Shareslake.
Redeemable - A new concept of cryptocurrency
Shareslake aims to become the base network for the stock markets of the future and companies' funding.
Redeemable (RED) is the base coin of the Shareslake network, which was the first ever Cardano fork. Redeemable is designed to get rid of crypto volatility and at the same time protect from fiat inflation. Continue reading to learn more.
The concept behind Redeemable is simple. It brings crypto features without exposure to volatility and at the same time protects from fiat inflation.
It IS NOT a stablecoin because it is not pegged 1:1 with a fiat currency.
It IS NOT a common cryptocurrency because its value changes so slowly that can be considered stable. Also, its value is deterministic (can be calculated).
These features are not only desired by businesses, but also by almost everyone who wants to save money.
How Redeemable works
Imagine we want to buy a pizza. Today it costs 10 USD but due to inflation, it will cost $14 in 4 years. Now let's imagine we buy the same pizza today for 10 RED. In 4 years, it will continue costing you 10 RED.
This effect, as well as the deterministic state, is reached by backing up Redeemable with a reserve of fiat and traditional assets. The reserve is invested into Treasury Inflation-Protected Securities (TIPS) and bonds and the interest earned is re-invested on the same reserve. This causes the effect to increase the reserve value following CPI rates. At any moment, the Redeemable value can be calculated as the value of the assets in the reserve. Let's illustrate this:
Let's start with a reserve of $100 and 100 RED in circulation.
RED supply: 100
Price per RED: $1
Now, let's suppose there is an inflation of 4% during the next 5 years. Since Redeemable will gain value at the same rate as CPI:
RED supply: 100
Price per RED: $1.17
We got an increment in the Redeemable value against USD that compensates for the loss of purchasing power. 4 years ago you could buy 10 pizzas using Redeemable and today you can buy the same 10 pizzas. If you use dollars or stablecoins, today you can buy only ~8.5 pizzas instead of 10.
Companies operating with RED can benefit from:
Knowing at any moment the value of its treasury in USD for taxes purpose and be sure it won't drastically change from one day to the next.
Maintaining liquidity in their treasuries without worrying because it will always be worth the same.
Setting prices in Redeemable and forgetting to update them every year to adapt to inflation.
People using or holding RED will maintain their purchasing power over time without the need to invest or lock their money into traditional investment products.
Why Redeemable is required?
A company or business operating in a certain country pays taxes on it. The currency adopted by the country for paying taxes will generally be the trading currency for the company shares. We can easily calculate the value of a company using the same currency it uses to report earnings or a currency whose exchange rate is relatively stable. This is a big problem when we talk about tokenizing company shares or bringing the stock markets to the crypto world.
Usability requires stability. In other words, no volatility. If it is already complicated to establish a business when you don't have to worry about currency fluctuations, imagine if your business can lose 10% of the accumulated income from one day to the next just because of the currency volatility. Remember a company reports earnings using the country's currency, so, if a company operates using crypto, at some point the currency exchange needs to happen. There are two common solutions for these problems:
Instant exchange: instant exchange consists of setting prices in fiat currencies and allowing people to acquire products with crypto by exchanging the currencies at the purchase time. It isolates the business from the crypto volatility but has implications on the clients, such as waiting for the purchase to see if they can obtain the product an x% cheaper tomorrow.
Stablecoins: stablecoins are basically a crypto representation of a fiat currency, bringing crypto advantages without exposure to volatility or the need to exchange currencies. But they are pegged on a 1:1 basis with fiat currencies, losing value due to inflation. This is why we think stablecoins are not stable.
Stablecoins have the same problems as fiat currencies. They do not preserve the business's wealth. A company, or any person, wants to preserve the value of the already earned income. A company (operating in fiat) that maintains a positive balance on its accounts is directly exposed to inflation losses. Also, it needs to update its product prices according to the inflation rates to remain profitable. Inflation rates, in terms of increases in living costs, are generally measured by the Consumer Price Index (CPI).
Redeemable is a new concept of cryptocurrency, that can be considered a hybrid between stablecoins and common cryptocurrencies, benefiting from increasing its value to forget about fiat inflation but being stable enough to be usable.
Shareslake Mainnet - The beginning of the stock market change
At Shareslake we use blockchain technology to shape the future of the stock markets. We provide benefits to the companies for each transaction of their shares without charging the investors.
Investors won't be ever again bound to a single broker or platform, eliminating portfolio transmission complexity. They can just have a single pluggable wallet, that can be used for the login at any exchange, always carry your funds with you.
On May 1, 2022 the Shareslake Mainnet was released, meaning that everyone can add a node to the network, earning RED from transaction validations, or use it for sending funds. The network is the base for the rest of the ecosystem that will allow trading stocks, buying products, automating companies' financial processes, etc.
Shareslake is a Cardano-based network, meaning that we use the eUTxO model and Ouroboros for consensus, indeed, we use the same open-source components of Cardano. Shareslake addresses are fully compatible with Cardano addresses, so you can manage funds in both networks with a single wallet, just changing the network connection settings.
The initial supply of 10 million Redeemable was already issued to 4 different addresses, corresponding to each ICO batch plus the team allocation. Apart from that, 900000 RED per year will be released and used to reward the companies adding value to our network.
Shareslake epochs long 3 days, unlike Cardano which uses epochs of 5 days. We decided to use 3 days epochs to allow a faster re-balancing of network stake, allowing faster pool hopping as well as receiving stake rewards more frequently. This change constituted a discrepancy compared with our initial whitepaper, which stated we will use 5 days epochs.
Joining the network
To encourage the adoption of new Stake Pool Operators (SPOs), and help them with the deployment, we created a GitHub repository with instructions and scripts: Stake pool deployment guide. It is really similar to how it was done in Cardano. Also, every question or doubt can be posted into our #stake-pool-operatorsDiscord channel.
We hope to see you there!
The Truth About How Stock Markets Really Work
Welcome to Shareslake, the Blockchain where real shares live. An ecosystem for companies' success.
Have you ever wondered about how stock markets work? Do you know? We can sum it up for you:
The current stock markets are closed systems designed to be operated by intermediate entities that are set between investors and the market itself. That approach incurs various fees and commissions that investors must lead with and a deficient flow of the capital from the investors to intermediate entities instead of companies. Doesn't sound good, right? Don't worry, here is the solution.
Just imagine we remove intermediates, we use blockchain technology to do that. Blockchain technology forces an open system free of intermediaries and total transaction transparency. Not bad, let's continue.
Now think about a stock market where investors don't have to pay any commission to intermedia... oh wait, we just removed them, meaning that there are no trading commissions. Well, more can be done. What if we reward listed companies? Makes sense. In the traditional market, they get funds on the IPO, but they don't see any funds unless they issue new shares, even though the shares are being traded, instead, they have to pay to be listed. We reward them for each transaction of their shares, and what is more incredible, without charging the investors for that.
The fact that the company shares are traded evidences that the company has real value, the shares are traded based on the investor’s belief that it will produce a net benefit so that trade should represent a direct fund for the company, to contribute to its success, which should be the ultimate reason of the market’s existence. An investor gives money to a company to help them reach the target of being profitable, if the investor’s trades do not affect the company's funds, the market loses its sense.
That’s the reason why Shareslake was designed in a way that, when an investor trades some shares of a company, the target company obtains a direct benefit from that operation. The more trades, the more benefit a company obtains compared with the rest of the companies, creating a competitive environment of trying to generate the highest value.
Finally, have you ever tried to move your stock portfolio to a different broker? Well, we also remove that pain, since you will have a single pluggable wallet that you can connect to any exchange operating in the Shareslake network. You will always carry your portfolio with you wherever you decide to trade.
The Shareslake protocol not only helps to remove all commissions and fees that investors used to pay, but also it provides periodical funds for companies in exchange for the usability and investing capabilities of the Redeemable, the Shareslake’s base coin.
If you are still curious about how we are shaping the future of stock markets, you can read the entire whitepaper.