How Can the Rise in Fuel Price Be Turned Into a Good Investment?
May 09 2022 - 2:34AM
NEWSBTC
The oil industry has had a chaotic two years. Crude oil prices were
down early in the COVID-19 pandemic; nevertheless, the price has
now topped $100 per barrel. Moreover, the worldwide benchmark,
Brent crude oil, is currently trading above $111 per barrel. There
has been a considerable rise in gas prices worldwide because of the
rise in oil prices. If prices continue to rise, as many economists
predict, it would stifle economic development, induce decreased
consumption, and, in some situations, spark political instability.
The increasing gasoline costs have already sparked fatal riots in
nations such as Kazakhstan, Iran, and Zimbabwe. And, the
significant factors for this have been the rebound in fuel
consumption since the height of the coronavirus outbreak and supply
difficulties in the aftermath of Russia’s invasion of Ukraine. Even
analysts at JP Morgan Chase & Co and Bank of America have
predicted that the Russian disruption will send oil prices up to
$185 per barrel. Reasons for Rising Fuel Prices Oil has had a
history of more significant fluctuations in price than any other
asset. The Organization of Petroleum Exporting Countries, or OPEC,
is the primary driver of oil price changes. Second is the supply
and demand rules. Prices fall when supply exceeds demand, and vice
versa when demand exceeds supply. The current instability is
because of Russia’s conflict in Ukraine, which has caused crude oil
prices to climb over $100 a barrel. Further, crude oil prices have
risen rapidly over the recent weeks as the US and its western
allies implemented severe sanctions on Russia. As a result of this,
citizens’ lives are affected due to fuel prices’ direct impact on
increasing inflation. Even the cost of other essential products has
increased drastically, leaving people devastated. Making the Most
of Rising Panic Rising fuel costs are putting economies under a lot
of pressure. Many are worried about how it will affect the cost of
other essentials rather than focusing on how to benefit from the
situation. Some solutions can aid in these situations, and specific
DeFi projects, such as Duet Protocol, offer them a unique approach
called synthetic asset collateralization. Users have to provide
liquidity to the protocol, which will be utilized to generate
synthetic assets. For example, a user can provide liquidity and
choose to mint dWTI, a synthetic asset whose price is pegged to WTI
crude oil. And with this asset, users can earn rewards and other
utilities within Duet’s ecosystem. Moreover, the platform allows
users to mint synthetic assets like Oil futures, stocks,
commodities, ETFs, Indexes, and Real-estate by providing capital to
its reserve. These assets, represented as dAssets, can be traded in
swaps (DEX), staked to earn rewards, or held in wallets to gain
exposure. And, the benefits of holding them instead of their
physical equivalents is that they provide greater liquidity,
high-speed transactions, easy accessibility, transparency and low
transaction fees. Minting Synthetic Assets on Duet Protocol Duet’s
Synthetic assets are divided into two categories, stablecoin and
dAssets(synthetic assets including but not limited to synthetic
index, synthetic commodities, synthetic real estates, synthetic
inverse asset, synthetic leverage asset, etc). Currently,
dUSD, dWTI and dXAU are the only dAssets supported with more of
them coming soon. The process of minting these assets includes
users providing collateral. Duet accepts more than a dozen
high-quality assets such as wBTC, ETH, USDT, DAI, LTC, etc. as
collateral. Interestingly, Duet Protocol accepts assets unique in
the DeFi world as collateral. It includes LP tokens in large swap
protocols and deposit certificate tokens in the credible lending
protocols to enhance the efficiency of users’ funds and the
composability of protocols. While minting Synthetic assets is just
one part of the protocol, the platform will also facilitate the
listing of creative synthetic assets, such as synthetic stablecoins
that track the inflationary level and NFTs. Anyone will be able to
list these assets permissionless with the help of oracle providers
like Chainlink, Band or Uniswap. This makes Duet Protocol the
infrastructure for collateral treasury, satisfying liquidation
demands while also assisting with regulatory compliance. In
addition, Duet will create a unique market-making mechanism using
synthetic assets with high liquidity and trade volume. This
eliminates the need to incentivize liquidity providers with tokens
and allows for arbitrage between TradFi and DeFi to sustain the
protocol’s liquidity. And, as a result, all “buying orders”
on-chain will be dealt directly. Volatility Is All That Matters The
best investments are made during volatile times. Economic
conditions keep fluctuating for various reasons, and one should
take advantage of these opportunities. The current state of rising
fuel prices may be an ideal time to invest in some assets. And,
synthetic assets from Duet Protocol, may be worth considering,
given its rewarding mechanism. The current war scenario and
interest rate hikes may last for a long time, but it is up to
people to seek out and grab opportunities.
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