Two years of chaos have been experienced by the oil industry. While crude oil prices dropped in the COVID-19 panic, it has now reached $100 per barrel. Brent crude oil, which is the international benchmark for crude oil prices, currently trades above $111 per bar. Due to the rising oil price, there has been an increase in global gas prices.
Many economists believe that if the prices keep rising, they will stifle economic development and cause decreased consumption. In some cases, even lead to political instability. Rising gasoline prices have already caused deadly riots across countries like 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.
Why Fuel prices are rising
The history of oil has seen greater price fluctuations than any other asset. The primary factor driving oil prices is the Organization of Petroleum Exporting Countries or OPEC. Supply and demand are the second. If there is more supply than demand, the prices will fall. Vice versa if there is less demand.
The current instability is because of Russia’s conflict in Ukraine, which has caused crude oil prices to climb over $100 a barrel. The US and its Western allies have placed severe sanctions on Russia, causing crude oil prices to rise rapidly. As a result of this, citizens’ lives are affected due to fuel prices’ direct impact on increasing inflation. People are left devastated by the rising cost of essential goods and fuel prices.
How to Make the Most of Rising Panic
Rising fuel costs put economies under great pressure. Instead of focusing on the positive aspects, many are concerned about the impact it has on other necessities. There are some solutions that can help in such situations. DeFi projects such as Duet Protocol offer unique approaches called synthetic asset collateralization. To generate synthetic assets, users will need to supply liquidity.
One example is that a user could provide liquidity, and decide to make dWTI (a synthetic asset with a price tied to WTI crude). And with this asset, users can earn rewards and other utilities within Duet’s ecosystem. The platform lets users create and manage synthetic assets, such as oil futures, stocks, commodities or ETFs.
These assets are represented as dAssets. They can be traded in Swaps (DEX), staked in order to win rewards, or stored in wallets in order to gain exposure. These assets are more liquid than physical ones, and offer faster transactions, greater transparency, lower transaction fees, easier accessibility, and easy access.
Duet Protocol: Minting Synthetic Assets
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 and dWTI are supported. More will be added soon.
These assets are created by users who provide collateral. Duet will accept over a dozen quality assets like wBTC or ETH and USDT. as collateral. Duet Protocol will accept unique assets from the DeFi community 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.
Although the Protocol will enable the minting of Synthetic Assets is only one aspect of it, the platform can also be used to facilitate listing creative synthetic assets like synthetic stablecoins which track inflationary levels and NFTs. With the assistance of oracle providers such as Band, Chainlink or Uniswap, anyone can list these assets without restriction. Duet Protocol is the infrastructure to provide collateral treasury and satisfy liquidation requirements while also helping with regulatory compliance.
Duet also creates a market-making system using synthetic assets that have high liquidity and large trade volumes. 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 most volatile times are the best for investing. There are many reasons that economic conditions fluctuate. One should make the most of them. This is a great time to buy assets, especially in the current environment of rising fuel costs. Duet Protocol synthetic assets are worth exploring due to its lucrative mechanism. While the current interest rate rises and war situation may be temporary, it’s up to individuals to find and seize opportunities.