What are Standard Digital Assets?
Problem
For years, the narrative surrounding crypto has been something along the lines of “it has no value…it’s not backed by anything…it’s all vaporware” and in response, native users have hemmed and hawed about “utility…market capitalization…network effects…use cases” without addressing the underlying issue and more often than not leaving their listeners glassy-eyed and not buying their token at the end of the night. For the first time since inception, the narrative surrounding crypto will point directly to the assets backing and Protocol Controlled Value (PCV) giving non-native individuals the answers they need to confidently enter into the space. $SDA capitalizes on this innovation by being the first of its kind in the newest asset class of Standard Digital Assets.
It’s simple really
The blockchain space is made up of a bunch of different asset types. A lot of it actually is vaporware and created for the sole purpose of making a quick buck. But blockchain at its core is one of the most significant inventions of the decade and there is technology that is being built that will be just as fundamental to our lives years down the line as the internet is today. And just like there were winners and losers in the development of search engines, there will also be losers here.
So what do we do? We pick the clear winners.
Standard Digital Assets are the ones that most people know of, use daily, and have typically been around the longest. By building a treasury of Standard Assets, SDA is more likely to survive and even thrive in bear cycles; eventually growing to become a top asset in the space, even the world, all while gaining more rapid utility adoption given its strong backing. The benefits of this asset class and protocol are vast:
- Easier to explain the value of a blockchain asset when there is a diversified basket of standard crypto and hard assets backing it
- Provides permanent liquidity for Standard Assets regardless of market cycle
- Provides market stability on a large scale (i.e., liquidity in, no liquidity out)
- Increases network security for assets that are used for validation of blockchains and node networks through staking
- Creates buy in from maximalists when their asset is brought in as the standard
- Adds fuel to the flames of blockchain adoption by incubating new standard assets and funding development and innovation on a large scale
Characteristics of the Standard Assets backing Standard Digital Assets:
Top Asset in a Given Vertical By Utility and/or Market Cap
SDAs represent the top asset in their space. It should be clear what the dominant player in any market is and assuming they fit all other criteria, that is the player Standard is betting on. Given the maturity of the blockchain market, only a few asset classes are useful to categorize here while more will continue to be added:
- Digital Store of Value — Bitcoin (BTC)
- Smart Contract Platform — Ethereum (ETH)
- Oracle — Chainlink (LINK)
- Physical Store of Value — Gold
Shows Consistent Growth and Adoption Over Time
As evidenced in the graphs above, all Standard Assets have continued to gain market share over time in a consistent manner year over year despite macro conditions. We believe that exposure to assets of this kind gives our treasury the power to perform for decades down the line rather than focusing on the week to week numbers. Our community can have confidence that the backing of their SDA tokens is with the out-performers and the long-haulers more so than any bright and shiny narrative at the time.
An Asset that has Proven it is “Too Big to Fail” by Showing Staying Power Through Bull and Bear Cycles
In a traditional crypto bear market we see the majority assets plummet, some more than others while standard assets have less downside risk and greater potential to push back to all time high eventually. A good example of this is in 2017/18 when Bitcoin topped and we saw the entire market drop 80–99%.
The assets that dropped the least were those that had the most confidence from long term holders. The assets that dropped the most were those that were newer, more speculative, and/or providing the least value. After the despair phase, it was standard assets such as Bitcoin and Ethereum that led the liquidity overall in the push back up into the new cycle.
A similar scenario during economic recessions like the ’08 financial crisis where the stock market sells off 40%+ while assets like gold not only maintain their value but sometimes increase in value as capital flows into the most secure assets. We see similar outcomes in gold during crypto bear markets as well which is what makes it a perfect non correlated asset to hold in any treasury.
What makes Standard Digital Assets different?
Besides the criteria for being considered a Standard Asset listed above, we want to continue to drive home the point as to why these assets deserve a category of their own.
Store of Value
A treasury is only as good as the assets it holds and the ability of those assets to not only hold their value, but to also increase in value over time. The assets we are choosing are just that and what we would call “recession proof assets”. The foundation for this will be choosing the most stable assets that are least correlated to the ebbs and flows of the market. Gold is a great choice for this given its history and fundamental position as a store of value (i.e., the Gold Standard). Bitcoin is moving in this direction given its market dominance over the last 10+ years and seeing governments and large corporations starting to hold it in their treasuries.
Network Utility
Another feature of assets like Ethereum and Chainlink is their utility and network effect due to the absolutely vital infrastructure they both provide. Smart contract platforms enable digital agreements to be built on top of blockchains enabling the development of a number of different applications and services (Dapps). Oracles enable smart contracts to bring in and utilize real world data in these agreements and applications. Both systems work synergistically to enable the building of secure tools and applications that benefit society. Both networks use the respective asset to pay for transaction fees and incentivize security, decentralization, and validator/node development. As these networks grow, this drives increased utility for the respective assets, shrinking circulating supply and eventually driving up the price in correlation with the value secured by the network. Utility is a nontrivial metric in this definition and we expect to bring in many more blockchain assets in other verticals over time once their respective niches mature.
Building a treasury in this way not only provides security for the underlying token it is backing, but also provides stability for the entire network since the treasury holdings will not be sold off in market downturns, which is what makes the Standard treasury the most secure backing for any asset.
Backed By Digital and Real World Assets
The need for a diversified portfolio with a wide range of assets across digital and real world verticals is apparent. We are the first DAO to bring this kind of exposure to not only crypto natives as we are on-chain, but to people around the world that typically would not have access to investment vehicles of this kind. Through StandardDAO, the world has the ability to decide on what backs the future of finance through decentralized governance. Bringing power back to the people, Standard Digital Assets are the way forward.
About StandardDAO
StandardDAO is a true store of value backed by a basket of Standard Assets. With this backing of the strongest real world and digital assets, Standard delivers sustainable yields and growth over assets that are not backed in such a way. Join the conversation below.
