Strike is a decentralized lending project. It’s a Compound finance fork built to facilitate higher availability of acceptable collateral and reduce the new collateral entry threshold.
Before now, making proposals and votes on protocols always have the challenge of losing the protocols’ scalability, security, or both. However, the emergence of Strike created a bridge for more new collateral without loss of security and scalability on a protocol.
In this Strike review we’ll highlight how it works, its governance token STRK, and how to buy Strike. Also, you will learn the uniqueness of this DeFi protocol.
What is Strike?
Strike is a DeFi lending protocol built on the Ethereum blockchain. It allows interest earning for users who deposit their cryptocurrencies within a non-custodial environment. The protocol enables users to control their digital assets always. However, they are directly bound by the project’s on-chain restrictions.
Through its operability, Strike’s major objective is to allows users to earn interest from their collateral in two ways. The first way is to earn as a supplier. This means that by depositing tokens, you will receive sTokens. What you receive is a representation of your stake in the pool supported by Strike.
Also, you can retrieve your initial deposits from the pool any time you wish. For instance, when you deposit BTC in a pool, in return, you get sBTC.
Progressively, the exchange rate for the sTokens may increase after some time following the original cryptocurrency. In that case, you’ll be able to redeem more of the original cryptocurrency than you deposited. The excess amount represents the interest you have earned.
The second way of earning is by borrowing other cryptocurrencies from the pool when you deposit your holding asset as collateral. There’s a variation in the maximum loan-to-value (LTV) ratio, which depends on the collateral cryptocurrency.
However, the current range lies between 50% – 80%. Similarly, the variation of the interest paid rate depends on the borrowed digital asset. A borrower will face automatic liquidation when there’s a drop in the deposited collateral below a given maintenance threshold.
History of Strike
There is no known founder or team for the Strike protocol. Spend.com launched this decentralized finance project on March 30th, 2021.
Through the launch, users got the empowerment to utilize their STRK, the Strike Governance Tokens. The token governs and rewards the protocol. It’s an open-source protocol on the Ethereum blockchain that runs using smart contracts. It has full operation by its DAO community.
Following its launch, Spendchain moves for a rebranding to Strike. The conversion of SPND to STRK was at the rate of 1,000 to 1. This means that for every 1,000 SPND coins a user has, he will get 1 STRK coin.
Furthermore, the team supply was burned to eliminate any subsequent team supply conversion. The current token holders now have full control of the protocol without third-party interference. Spend.com launched the Strike governance token (STRK) without any ICO. Users have the choice of either mining STRK or buying it from other users.
The cryptocurrency has a market capitalization of over $160 million. At the time of this writing, the current ranking for Strike protocol is significant.
The Strike protocol is a fork of the Compound Cryptocurrency, developed to correct the flow of digital assets through a decentralized manner. During its development, Strike had all the trendy configurations and innovations. Also, using the native token STRK, users can necessary changes and improvements to the protocol.
What makes strike unique?
Strike maintains a very high level of community distribution. Its token distribution has no shareholder, venture capital, or advisor/founder token shares. It follows a principle of ‘Governors,’ 21 delegated addresses by the Strike Token holders. Governors come from the top 21 weighted addresses in the protocol. It can be either from the STRK balance or the delegated STRK balances.
The protocol uses 28 days Epochs to set the Governor’s cycles. At the expiration of an Epoch, there will be an election of a new set of Governors. There can be reelection of the previous ones or selection of new ones that form the top 21 addresses on the protocol.
The Governors will whitelist new digital assets that can be added to the protocol. This will protect Strike from malicious attacks that may come from an unauthorized participant. Also, it will increase the scalability of the Strike as a decentralized finance protocol.
Using community governance distinguishes Strike from other likely Defi protocols. STRK holders decide on the entire changes and others exclusively without the interference of the protocol’s team. They recommend some protocol changes, as well as deliberate and vote for the implementation of such changes.
Some of the issues they handle include adjusting collateralization conditions or selecting the digital assets to support. Also, they may decide to alter the distribution ratio of the STRK tokens.
Usually, you can get STRK tokens by buying from an exchange, taking a loan, or depositing other cryptocurrencies.
Strike Token (STRK)
The Strike native token, STRK, governs and rewards the protocol. Strike runs on the Ethereum blockchain; hence STRK is an ERC-20 token.
The Strike project has a fixed number of its native token, STRK, similar to many other cryptocurrencies. The total maximum supply of STRK is 6,540,888 tokens, of which the circulating number is 2,540,888.
The Strike token migrated from the conversion of Spendcoin in the ratio of 1,000 SPND to 1 STRK. Since there was no ICO or additional sale of STRK, users can either buy the token from holders or mine from the protocol.
For mining STRK from the protocol, Strike makes a distribution based on the market’s distribution weight. According to the distribution, both the suppliers and borrowers get 50%. However, the distribution ratio depends on all respective markets’ borrow sizes.
The Strike protocol has a future plan of distributing 4 million tokens to its users within 8 years. The distribution breakdown is set at 500,000 STRK per year. At the time of writing, the price of STRK is $48.66 per token.
The protocol voters can change the STRK emission rate at any time. They can call up a proposal using the community governance to either increase or decrease the emission rate.
How to Buy Strike Tokens (STRK)
STRK is listed on some cryptocurrencies exchanges. However, you can’t buy STRK directly using fiat currencies. The process to use requires that you’ll first buy another digital asset such as Bitcoin or Ether using your fiat currency. Then, you can exchange it for STRK on any platform that supports STRK.
The steps below give you the full guide on how to buy STRK.
Step 1: Register on a Trusted Crypto Exchange
The first thing you should do is to register on with a crypto exchange and open your online exchange account. This involves visiting the official website of the company and sign up for a new account. Then, fill the on-screen form using your details such as name, phone number, email and home addresses, etc. Some platforms will carry out account verification and will demand you upload your ID.
The acceptable ID to use is always a government-issued ID such as a driver’s license or passport. Also, you will upload a recent utility bill or your bank statement. This serves as a Know Your Customer (KYC) process for the platform.
When you get a confirmation for the verification, you can deposit your fiat currency. Most exchanges support several payment methods such as bank transfers, credit/debit cards, PayPal, Skrill, and others.
You must understand that though transfers using the cards are instantaneous, they attract higher fees. However, bank transfers or free or have lower fees but will take a longer time to impact your exchange account. In both cases, your country of residence has its influence.
Step 2: Buy BTC Using the Fiat Currency
Proceed to the option to search and select USD/BTC if your fiat is USD. Otherwise, select the correct pair that represents your fiat money. Then, click the TRADE button. Enter the amount of BTC you want to buy and click the BUY button. There, you have BTC tokens in your account.
Step 3: Trade BTC for STRK
In this guide, we assume that you are using the same exchange to complete the entire process, making it easier. This means that you will ensure to choose an exchange that has both BTC and STRK on its listing. If not, you will need to transfer BTC to another exchange that supports STRK before you can continue with this process.
You will continue by clicking the TRADE/EXCHANGE button on your account screen. Then select the trade option for BTC/STRK from the dropdown. Enter the amount of BTC you want to trade or STRK you want to buy.
Confirm your order and click the BUY button. The exchange will then execute your order and exchange the BTC tokens for STRK. You can then withdraw your STRK tokens and store them in a private wallet.
Where to Buy STRK
When you’re considering buying STRK, there are certain factors you should watch out for before choosing an exchange.
Just as we have thousands of digital assets available in the crypto world, so are there multiples of crypto exchange. Though some platforms may offer lower fees, the major emphasis should be on security and reputation.
You must invest your money in a trusted, reputable, and secured exchange. This will help you to avoid cases of fraud, hacking, and funds misappropriation by management.
The trusted exchanges have strict regulations from top-tier financial agencies. Their platforms are safe, and the interface is user-friendly and easy to navigate. They also have special tools and features that will assist users in their trading. Also, the cost may be low and moderate.
Some of the trusted platforms to buy STRK include OKEx, Coinbase, Gate.io, Kucoin, Bittrex, Digifinex, etc.
Where to Store STRK
When you’re planning on holding or keeping STRK tokens for a long time, you should use a more secure means. It’s always advisable to move them to a private wallet for storage. Though some exchanges are safe and may have some security features for their customers, the tokens are still vulnerable online.
Leaving your digital assets in your exchange account (Hot or software wallet) exposes them to fraud and hacks. Thus, the use of a private wallet is always the best choice for advanced security.
STRK is an ERC-20 token and can be stored using any compatible ERC-20 wallet. The cold wallets or hardware wallets keep your assets from online views and reduce the chances of fraud and hacking.
The wallets are USB-enabled devices with a military-like level of security. Examples of hardware wallets include Ledger Nano X and Ledger Nano S.
Security in Strike Finance
Strike operations are based on smart contracts. For example, the contracts enable the minting of sTokens once there’s a deposit of Ethereum or another ERC-20 cryptocurrency. Also, the redeeming of any staked asset by the protocol users is based on the smart contract.
For every supported cryptocurrency on the platform, there’s a specific collateralization factor by the protocol. This helps the pool always to remain overcollateralized.
Once there’s a shortfall below the minimum maintenance level of the collateral, the protocol sells it to liquidators using a 10% discount. This helps Strike to pay down the loans and return the leftover to an acceptable collateralization condition.
By maintaining its security, the protocol enforces borrowers to keep their collateral levels. Also, it gives a platform for lenders to invest even as liquidators enjoy unending earning opportunities.
The Strike protocol has sTokens tagged to the underlying or original acceptable cryptocurrency. The sTokens are portable, bound by smart contracts, and ERC-20 compliant. They give a representation of the proportionate value of the original crypto on the protocol. Also, the sTokens can redeem the original assets at any time.
To maintain efficiency in the operability of Strike Finance, there are the processes of minting and burning of the sTokens. Once the protocol receives the underlying asset, there will be the minting of the sTokens.
The minting and burning of sToken on the Strike protocol are completed through the smart contracts, API, or user interface. Burning the sTokens signifies that a complete redeeming for the original cryptocurrency. Hence, the sTokens used in concluding the process is destroyed.
Furthermore, you can view your sTokens through the list of tokens linked to your address on Etherscan. Also, some wallets have an integration of sToken balances, such as MetaMasl and Coinbase wallet.
Illustrating the Token and sToken relation
To get a clearer understanding when relating the Token and sToken, we’ll take the illustration below.
If you supplied 1,000 BTC to the Strike protocol at an exchange rate of 0.005. You will get 20,000 sBTC as your sTokens (1,000/0.05).
After some months, you may want to redeem your BTC Tokens from the Strike protocol at an exchange rate of 0.07. this means that:
- Your sTokens of 20,000 sBTC has surged to 1,600 BTC Tokens (20,000 x 0.08)
- You can then withdraw 1,600 BTC that will redeem the sTokens of 20,000 sBTC completely
- Alternatively, you can just withdraw a part of your sTokens, like your 1,000 BTC that redeems 12,500 worth of your sTokens. Then you can keep the remaining sTokens worth 7,500 sBTC in your wallet.
Just like ordinary crypto tokens, you can conveniently transfer your sTokens. However, you need to exercise utmost care while doing that. A transfer of your sToken is equivalent to a transfer from your Strike protocol underlying crypto balance. Thus, there’ll be a drop in your balance.
Also, a sToken transfer may be unsuccessful if the account has negative liquidity. This can happen when the account previously entered that sToken market, and such a transfer reduces its balance.
Strike a DeFi protocol. Hence the users always have complete control over their cryptocurrencies. They can move their assets to the protocol using the mint function that represents the supply of collateral to Strike. A confirmation of the supplied cryptocurrency automates the minting of the proportionate sTokens for the ordinary crypto.
To borrow from the platform, a user will utility his supplied asset as collateral. This ensures that paying back of the borrowed value. The interest payable by the user is usually added to the Ethereum block. Some factors will determine a borrower’s limit, such as the current value of his supplied collateral.
Strike is a DeFi money market protocol that ensures scalability and security. Built on the Ethereum blockchain, the cryptocurrency has operability that depends on smart contracts, keeping off every third-party interference.
Its native token, STRK, governs the changes and decisions on the platform. The protocol enables crypto developers and users to build and transact seamlessly on decentralized finance applications.
The security of the protocol is propelled by governing method on the platform that comes through the delegates from the top addresses. Also, minting and burning processes on Strikes have a great role in putting the protocol at the forefront in the DeFi lending market.