STRAT

What is STRAT?

STRAT is the coin of the Stratis cryptocurrency. It is the fuel for the Stratis Platform. Within the Stratis Platform STRAT is used as gas for smart contracts, as collateral for sidechains, as a currency for crowdfunding through the Stratis ICO Platform and as collateral for the Breeze Privacy Protocol Masternodes. Staking nodes are rewarded 1 STRAT per successfully forged block as a way of incentivising node operators to secure the Stratis network. STRAT is also traded speculatively with a number of fiat and cryptocurrency trading pairings on exchanges.

What is the value proposition for STRAT as an investment?

STRAT is the fuel of the Stratis Platform. Each of the services of the Stratis Platform has been designed to impact the scarcity of STRAT when they are used. A more general discussion about the scarcity of a resource and its effect on price can be found here. For STRAT in particular, the value proposition comes from the fact that you need STRAT if you want to use the technology of the Stratis Platform. If you want to execute or deploy a Stratis smart contract, you need STRAT. If you want to use a sidechain, you need STRAT and you need to lock that STRAT out of supply. If you want to operate a Masternode, you need STRAT and need to lock that STRAT up for as long as you are operating the Masternode. If you want to participate in an ICO which is crowdfunding through the Stratis ICO Platform then any coins you send in besides STRAT and BTC will be converted into STRAT. More detailed breakdowns of the way usage of each of the features of the platform introduce value to STRAT can be found in answers to questions in this section.

There is one particularly important question you should be able to answer when choosing to invest in a cryptocurrency: “why will I be able to sell my coins to someone else at a higher price than I bought them for?” If you can’t answer that question, you’re not investing: you’re gambling. Hopefully the answers to the questions in this section will provide a good starting point for an answer to that fundamental question for investment. In essence, with enough usage of the Stratis Platform, someone will buy your coins off you at a higher price than you bought them for because they will want to use the coins to utilise something built on top of the platform. 

Is investing in Stratis the same as investing in Stratis Group Ltd?

No. When you buy STRAT and treat it as an investment (as opposed to buying STRAT to use a service built on top of Stratis) you are treating the Stratis cryptocurrency as an investment. Stratis and Stratis Group Ltd are two different things. Someone who is investing in Stratis is not also investing in Stratis Group Ltd. This means that by investing in Stratis you are not given any of the rights that an investor in Stratis Group Ltd would be given. Stratis Group Ltd have never presented STRAT as an investment and they have no responsibilities to people who treat buying STRAT as an investment.

Where can I buy STRAT?

If you are buying directly from fiat, then where you buy STRAT will depend on the country you are based in. Always do your due diligence before using any third-party platform or service. You are your own banker in crypto and you are responsible for the safety of your own money. Buying direct from fiat usually means you’ll be buying above the market price. If you would prefer to buy from a cryptocurrency trading exchange, where you will likely receive a better price, you will have to buy BTC first from a platform which supports your fiat currency and then use one of these exchanges to trade the BTC for STRAT. Your best bet is to google one for your country and research it carefully yourself, but here are some options nonetheless:

Buying from fiat:

U.K. and Europe

U.S.

Canada

Where can I trade STRAT?

STRAT is traded on a number of exchanges worldwide with a number of different trading pairs. A few of the most popular and highest volume exchanges are:

A full list of exchanges supporting STRAT trading pairs can be found here.

Where can I keep my STRAT?

Cryptocurrency coins are kept in wallets. There are many wallets you can choose from to hold STRAT, but we will concentrate on four which fulfil different requirements. It is important to remember that you are ultimately responsible for the safety of your coins. Each of the following four wallets are perfectly safe if used responsibly.

Staking Wallet: Stratis Core

Stratis Core | Stratis Academy: Stratis Core | Stratis Discord for support in the #full_node channel

Stratis Core is the staking wallet for STRAT. It was built by Stratis Group Ltd to allow STRAT investors to hold their STRAT and be rewarded for helping to secure the Stratis network through staking. This wallet is a Full Node and so downloads the whole Stratis blockchain, which is currently about 1.6 Gb in size. Stratis Group Ltd are building out a cold staking solution which will be available within the Stratis Core wallet once the majority of staking is done using the wallet. Stratis Core is Hierarchical Deterministic

Lightweight Wallet: Breeze Wallet

Breeze Wallet | Stratis Academy: Breeze Wallet

The Breeze Wallet is a lightweight wallet. This means that it does not download the full blockchain like Stratis Core does. Breeze does not allow you to stake STRAT. Breeze is a multi-chain wallet and supports both STRAT and BTC, which means you can hold both STRAT and BTC in the same wallet. Breeze also supports the Breeze Privacy Protocol which allows you to make your activity private by tumbling your coins. It was built by Stratis Group Ltd to allow users to hold their STRAT and BTC in a lightweight wallet and introduce privacy to their Bitcoin activity. Breeze is Hierarchical Deterministic.

Hardware Wallet: Ledger Wallet

Ledger Wallet

The Ledger Wallet is a separate piece of hardware which allows you to store your STRAT away from your computer and not connected to the internet. This is known as cold storage. People opt for cold storage if they want an added layer of security for their STRAT. Having their STRAT offline and away from any computer which is connected to the internet makes it very, very difficult for someone to steal your coins. You cannot stake from a Ledger Wallet.

Mobile Wallet: Coinomi

Coinomi

Coinomi allows you to keep your STRAT on a mobile wallet. For some, the convenience of having your coins on their mobile is an attractive prospect. You cannot stake from the Coinomi wallet, the staking wallet is the Stratis Core.

Will STRAT be added to more exchanges?

Both Stratis Group Ltd and the Stratis community are always reaching out to new exchanges to get STRAT supported on more exchanges. It is ultimately up to the exchanges themselves when or if they will add STRAT.

How does it benefit the Stratis network if STRAT increases in value?

Stratis is the fuel for the Stratis Platform, a suite of products developed by Stratis Group Ltd. It is important for the security of the cryptocurrency that the price of STRAT goes up since Stratis is Proof of Stake. In order to mount a 51% attack on Stratis, the attacker would need to be staking 51% of the network weight. Right this minute, that would mean they would need to stake with over 20m STRAT. The higher the price of STRAT, the harder it gets to mount an attack.

Stratis Group Ltd were allocated 8m STRAT for development. You can see the breakdown of the post-ICO STRAT allocation here. The higher the price of STRAT, the more money Stratis Group Ltd have to fund development. Stratis Group Ltd have built the services of the Stratis Platform in such a way as to introduce value to STRAT when they are used.

What Masternodes can I operate using STRAT and what income can I expect?

Breeze Privacy Protocol Masternodes

The Breeze Privacy Protocol requires a Masternode server to perform the tumbling service. Each Masternode is a Tumbler and receives the tumbling fees inherent to the process. The Masternodes require a collateral of 250,000 STRAT in order to be set up. These STRAT have to remain locked up for the duration of the Masternode’s operation. Besides this, the Masternode operator needs to have a minimum of 5 BTC. This is used in the tumbling process itself.

The Masternodes receive the fees associated with the tumbling. The fee can be chosen by the Masternode, but it defaults to 1%. This means that the Masternodes will receive 1% of all of the BTC being tumbled through them. At the moment it is not possible to know the income being received by the Masternodes. This is due, in part, to the nature of the service being provided by the Masternodes. The Breeze Privacy Protocol is, as it says, all about privacy. The only way to know what the Masternodes are receiving would be to run one, or to convince an operator to share their income. Operators are unlikely to do this as it is not in their interest to divulge their earnings and hence potentially increase competition on the Masternode server.

Will there be other Masternodes?

There will be lower tier Masternodes besides the 250,000 STRAT Breeze Privacy Protocol Masternode. Stratis Group Ltd intend to build out functionality for 10,000 STRAT Masternodes. However, it is not clear what function they will be performing which makes it impossible to guess at when they will be available or what their expected income will be.

How do smart contracts bring value to STRAT?

When a smart contract is executed it requires computing resources in order to be run. It will require storage on a hard drive, some memory and some CPU usage time. An estimate of the resource requirements for each smart contract will be automatically tallied up by giving a weighting to each segment of code contained in the contract. This weighting will translate into a fee, called gas, which will cover the resource costs of running a smart contract. The gas amount will be paid by the smart contract user to the node operator and that payment will be made in STRAT. So, in order to execute a smart contract, the user will need to pay the node operators in STRAT and every smart contract will cost a certain amount of STRAT to run. You can read in more detail about STRAT gas, gas prices and gas limits here.

Every time a user wants to use a Stratis smart contract they’ll need to have STRAT and pay the gas cost to the node operators. This provides significant utility to the coin. It is a prime example of how utility drives demand: people will want to use the services and platforms built using Stratis’s smart contracts and to do so they will need to buy STRAT. For certain applications, it is reasonable to expect that the user experience will be streamlined so that the buying of STRAT is done automatically. This would remove it as a barrier to adoption. However, the process will still be there. As will the outcome, that demand for STRAT will increase.

Demand induces scarcity. This is the economic underpinning of the smart contracts. If some platform or application which uses smart contracts is attractive enough to users, then they will execute smart contracts. Every time they do, STRAT is spent as gas. If they want to use the platform or application, they need to have STRAT. This need translates to demand for the coin, which, when realized, introduces scarcity to the coin. Moreover, the STRAT paid as gas goes to stakers. This further incentivizes people to stake their STRAT which in turn reduces the circulating supply and constitutes supply-induced scarcity.

How do sidechains bring value to STRAT?

A sidechain is a bespoke blockchain that is linked to the Stratis mainchain. In their current iteration, sidechains work like this:

  1. The sidechain is created and a set number of sidechain coins are pre-mined in the genesis block. This is the total number of coins available for the sidechain.
  2. There is a federation of nodes which control the transfer of STRAT <-> sidechain coins.
  3. If someone wants to use the sidechain, they must send a number of STRAT to the federation and in return they will receive a number of the sidechain coins. This number is decided by a predetermined rate of exchange. For example, it could be that for every 1 STRAT you send in, you receive 10 of the sidechain coins.
  4. The STRAT remains locked up until someone sends a number of the sidechain coins to the federation and in return they receive STRAT according to the rate of exchange. For example, if they are finished with using the sidechain they can send back the 10 sidechain coins to the federation and they will receive the 1 STRAT they initially sent in.

This is, of course, a vast simplification of the process (a lower level article can be found in Stratis Academy: A breakdown of the Two-Way Federated Peg solution), but it hits the key points as far as we’re concerned:

A) STRAT is needed if you want to use a sidechain

Anyone wanting to release sidechain coins in order to use the sidechain will need to have STRAT to do so. This introduces demand to STRAT which in turn has an impact on scarcity. Scarcity is the key determining factor in the price of a cryptocurrency.

B) STRAT is locked up when you use a sidechain

If you are using the coins of a sidechain, they represent a certain amount of STRAT which is locked up. A popular sidechain could potentially lock up a significant amount of STRAT. Let’s consider a sidechain which uses its sidechain coin as the currency of some particular economy, let’s say it is the payment channel for some kind of decentralized auction platform built using smart contracts. If this economy is $1m in size, then it means that $1m worth of STRAT is locked up by its users. Since sidechains offer an endless variety of blockchains, this could result in a large number of sidechains locking up a large number of STRAT at any one time. This drop in effective supply will once again induce scarcity to STRAT.

C) The price of the sidechain coin is effectively pegged to the price of STRAT, determined by the rate of exchange accross the chains

STRAT can be exchanged for sidechain coins and sidechain coins can be exchanged for STRAT once a sidechain has been founded. The rate of exchange will always be the same, so you will always get the same number of STRAT for your sidechain coin and vice versa. This means that the sidechain coin will be pegged in price to the STRAT coin. Sidechain coins can of course be traded separately on an exchange with other currency trading pairs. This means that it is possible that the price can fluctuate locally for the sidechain coin. However, through a levelling process similar to arbitrage, fluctuations in the price of a sidechain coin which go against the STRAT price will be counteracted by people capitalising on the difference in price (either by exchanging STRAT for sidechain coins or sidechain coins for STRAT). This means that if the overall value of a sidechain goes up (perhaps due to the utility or nature of the application of the sidechain), then more STRAT will be locked up to account for the increase in price. In this way, the value generated by a sidechain will be reflected by an introduction of scarcity to STRAT. As we’ve talked about many times before, scarcity is what drives the price of a coin.

How does the Stratis ICO Platform bring value to STRAT?

The Stratis ICO Platform is a way for companies to crowdfund their project through an ICO. The platform allows the user to invest in an ICO using 50+ of the most popular cryptocurrencies. However, every cryptocurrency which isn’t STRAT or BTC will be converted into STRAT automatically through Changelly. Changelly does this by buying STRAT directly from a number of exchanges. The Stratis ICO Platform allows an ICO to receive up to 400 BTC. Any BTC over this number will be converted into STRAT via Changelly.

Hopefully it’s not too hard to see how the Stratis ICO Platform will introduce value to STRAT. If a company using the Stratis ICO Platform raises $20m through an ICO, that is $20m dollars worth of STRAT (minus whatever is raised in BTC up to 400 BTC) being either bought off the market or sent into the ICO. If the company also opts for a lock-up period (which is commonplace) for the received funds, then this STRAT could be locked out of supply for a long time as well. Both of these will induce scarcity, the first through an increase in demand and the second through a drop in effective supply, for STRAT. Scarcity is what drives the value of a coin, which could mean the Stratis ICO Platform could generate a lot of value for STRAT.

How do Masternodes bring value to STRAT?

Scarcity is what drives the value of a coin. The Breeze Privacy Protocol Masternodes require that 250,000 STRAT be locked out of supply for the duration of the Masternode’s operation. This is supply-induced scarcity for STRAT. The Masternodes receive an income which is awarded to the operator. This income creates demand for Masternodes which in turn creates demand-induced scarcity for STRAT itself.

Next page: Staking STRAT →