Asymetrix’s winner-takes-all staking could wake up the napping crypto space.
If you’ve been investing in digital assets – or for that matter, any kind of alternative finance, from SAFEs to CFDs – you didn’t get into it for 4% returns. These days, you can get close to that with U.S. Treasury bonds.
But with crypto trading in the doldrums, and interest-producing tokens generating roughly the same yield as any brokerage’s money market account, why even bother with the blockchain?
You’re not the only one asking that question. It has also occurred to Lisbon-based software engineer Rostyslav Bortman.
“My team invented a protocol which allows you to earn several hundred percent APR on ETH staking, even with a small deposit,” says Bortman, co-founder and CTO of Asymetrix. “And a little bit of luck.”
Asymetrix is a DeFi protocol for asymmetric yield distribution. That is, everyone who participates gets an equal shot of a huge payout, rather than the assurance of a tiny one.
Asymetrix takes its inspiration from premium bonds, a type of U.K.-issued government security. Rather than pay each investor a fixed yield, the interest accrued by the entire bond issue is pooled. Then one lucky investor wins the whole pool at maturity. The return for everyone else might be 0%, but for that one who has been favored by fortune, the effective interest rate is positively surreal.
In Asymetrix’s case, the top three winners of the periodic drawing share the windfall, split 50/30/20. These drawings are currently held weekly, but the frequency could be rescheduled depending on the decisions of its DAO governing body. In some marketing materials, Bortman’s team estimates the annualized yield could reach 999%.
Of course, the odds don’t favor that, especially for short-term coin flippers. But the longer someone stays invested in the pool, the greater their likelihood of winning the Asymetrix drawing. Also, the more value you keep in the pool, the greater your weighted-average chance of a successful drawing.
The team insists on avoiding the term “lottery,” and there is an important distinction: In a lottery, you don’t get the price of your ticket back. At Asymetrix, however, you get to keep your invested token.
Covering the spread
Asymetrix offers two tokens. The native ASX coin represents participation in the decentralized autonomous organization which governs the project. The non-traded utility Pool Share Token, or PST, acts as a proxy for stETH, a widely traded staked ether.
The project has only recently emerged from stealth mode and is just now beginning to distribute ASX to the public. While there is a secondary market for ASX, Asymetrix is dropping them for free to participants. At full dilution, Asymetrix expects to have 100 million tokens in circulation.
Clearly, Asymetrix isn’t asking anyone to invest their entire crypto portfolio in this particular coin. After all, premium bonds today account for only 4% of the entire British gilt market. Investing in ASX and anticipating the big drawing is supposed to be fun, and it’s marketed as such.
Bortman’s architecture presents many facets. To start with, ETH doesn’t stake itself. That is done by a decentralized protocol known as a liquid staking derivative, or an LSD. In particular, the independent LSD that synthesizes stETH is called Lido.
Nuts and bolts
LSDs exist because of the recent – and finally successful – migration of the Ethereum chain from proof-of-work to proof-of-stake consensus. Staking is widely viewed as beneficial to the transition.
Of course, that means ASX is a derivative of a derivative, so it needs to have a compelling story to attract a skeptical investor community. But Asymetrix has that covered with its basic value proposition: If you win, you win big. If you lose, you still get your principal back and you had a good time playing the game.
Nobody, though, sees the appeal of a rigged game. That’s why it’s important for Asymetrix to be transparent about how it guarantees that the drawing is completely random and that no single player can put everyone else at a disadvantage by finding a hidden pattern.
An individual’s chances of winning is determined solely by a formula that calculates their time-weighted average balance, or TWAB. Once the TWAB-based tickets are generated via a Hacken-audited smart contract, Chainlink then randomizes them. Results are then posted to the Asymetrix site to ensure transparency.
The result is a fair game that reminds HODLers why they got into crypto in the first place.
“The entire concept of premium bonds is such an obvious candidate for tokenization, I’m a little surprised nobody thought of this before,” Rostyslav Bortman says. “Clearly, Asymetrix is democratizing fixed-income investing in this century, just as the pooled-interest gilts did in the previous one. It offers a social context for investing by making a game of it. And although it adds elements of chance, the long-run odds are with the player, not the house. This incentivizes participants to hold their assets, and teaches them to plan for the long term.”