We are often asked, ‘Which low-cap altcoin should I look into?’
In December, a new low-cap altcoin was added to the list, namely SPARTA (Spartan Protocol). This had a $4 million market cap at that time and was shared by us on both Twitter and in our Telegram channels. Even then, we indicated that this was a unique opportunity, and it proved to be so. In fact, SPARTA has risen to a market cap of $86 million, an increase of 2050% within two months!
Does this mean that SPARTA is no longer interesting? On the contrary. We still believe that Spartan Protocol will play a huge role on the Binance Smart Chain. We will explain below what the protocol is, and why we got so wild about it.
We are taking a closer look at this project with the goal of giving you an objective view in a way that everyone can understand. This article is not intended for promotion.
The Spartan Protocol (SPARTA) is a protocol for swap transactions, liquidity and synthetic assets (assets linked to the price of another asset) on the Binance Smart Chain. At the core of the protocol are liquidity pools, similar to Uniswap.
At the core of the protocol are liquidity pools, similar to Uniswap. But, instead of transaction fees based on fixed interest rates, a liquidity-sensitive fee model similar to THORChain’s fees is used. We understand that this sounds complicated and hope you understand it well by the end of this post.
Currently, liquidity providers (and traders) are being penalized on various automated market maker protocols, such as Uniswap, for manipulation by arbitrage bots that take liquidity from both users and providers. These arbitrage-bots have been around for a long time, sucking up millions of liquidity every week from unknowing users who set their transaction slippage higher than necessary when completing a swap.
Both synthetic mining protocols like Makerdao and Synthetic use illiquid collateral/markets to liquidate collateral, which makes it vulnerable to a downward spiral that has caused a chain of liquidations several times in the past. This means that the price continues to be pushed down each time as user stop-loss orders are activated in a chain.
Spartan Protocol aims to solve these problems through an SMP protocol, by using a single means of settlement and protocol-wide incentives to increase liquidity
A slippage-based reward model is used to reward liquidity providers instead of those arbitrage bots, a solution widely discussed and explored by THORchain. Finally, collateralized pool shares (synthetic assets) are used instead of liquid collateral. Synthetic assets are generated through the protocol, using price anchors offered by liquidity pools, these are backed by the liquidity provided in the pools they offer. Because these pools are directly in the market, they are stable in value and can be liquidated immediately. This allows positions within them to be liquidated without allowing downward spirals to occur.
The protocol is intended to be entirely community-driven and therefore uses a DAO (governance) format for rates, time factors, and upgrades to certain sections of the code (which are voted on by holders who are encouraged to do so). But it does not overcomplicate governance and sets high standards for approving a proposal.
Because the protocol is built on the Binance Smart Chain, BNB is used to pay transaction fees within the protocol. Similar to how ETH is used to pay for gas on the Ethereum network.
Summarized, we are interested in Spartan Protocol because:
Within the protocol, one token is used to tie everything together, namely SPARTA. This token is required to use the protocol, for both basic operations and collateral.
SPARTA was distributed in a unique way, with users burning selected BEP20 tokens to receive a portion of the 100,000,000 original SPARTA tokens. The team called this a “Proof-Of-Burn” concept where tokens are “bought” rather than distributed for free through coins or an airdrop. This means no team tokens, no advisor tokens, no shady stuff!
This means that token holders have “skin in the game” and are less eager to dump the freely obtained token into the market.
The burn address shows that 55M SPARTA was tokenized through the burn mechanism ($16,500,000 of BEP-20 tokens tokenized), the remaining 45M SPARTA were circulated through the bonding program. This alternative method allows users to enter BNB, BUSD or USDT and have an equivalent amount of SPARTA minted, adding both assets to the liquidity pool. These tokens are granted unconditionally for 12 months.
The max. supply will be 300,000,000 SPARTA, the remaining 200,000,000 will be distributed to holders of SPARTAN liquidity pool (LP) shares, based on the total number of discontinued tokens (DailyEmission = [300,000,000 – totalSupply] / EmissionCurve, which starts at 30% and drops to 3% after 10 years).
The initial value of SPARTA was set at $0.30 per token, meaning that most current token holders paid $0.30 per token.
The burn address shows that over $35M in tokens has been burnt. BscScan shows that the currently circulating supply is 62,698,908 SPARTA, with a market capitalization of $81,789,336 and 3,068 token holders, meaning that there are no huge whales holding a large percentage of tokens.
We are aware that the price has now increased more than 20x since we first shared it. However, the protocol is still in its early stages and the overall market valuation is very low compared to major competitors. As CZ is positive about the protocol, and as we expect Binance to get involved in marketing activities once synthetic assets launch, we expect it to see another huge rise.
It should be noted that the risk is higher now than when the price was lower. Take this into account and decide for yourself whether you think the risk versus reward is still worth it.
Total pooled liquidity reached about $1,000,000 in December, with a total protocol volume of $2,555,194. We indicated that we expected to see this grow. So currently that has grown to $36,000,000 with a volume of $269,354088.
That’s a huge growth in such a short time, even before the synthetic assets are launched! This means that liquidity providers have seen huge rewards, and will continue to see them as long as volume continues to grow.
The November update shows that new community members have joined the (anonymous) team to increase communication. The new bonding mechanism was announced, the DAO will finally be enabled (while the community was already hugely involved in the decision-making process before the DAO launch), and several other exciting updates were shared.
The community, current token price, current protocol phase and growth, communication and potential Binance exposure combined make this a solid gem in our books.
Binance Founder CZ also shared his opinion about Spartan Protocol:
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