How can the increase in the fuel price be converted into a good investment?


The oil industry has had two chaotic years. Crude oil prices fell early in the COVID-19 pandemic; nevertheless the price is now top $100 per barrel† In addition, the global benchmark, Brent crude, is currently trading above $111 per barrel† Due to the rise in the oil price, the gas price has risen sharply worldwide.

If prices continue to rise, as many economists predict, it would stifle economic development, reduce consumption and, in some situations, lead to political instability. Rising gasoline costs have already sparked deadly riots in countries such as Kazakhstan, Iran and Zimbabwe.

And the main drivers for this are the recovery in fuel consumption since the height of the coronavirus outbreak and the supply difficulties in the wake of the Russian invasion of Ukraine. Even analysts at JP Morgan Chase & Co and Bank of America have predicted that the Russian disruption will push oil prices up to $185 per barrel.

Reasons for rising fuel prices

Oil has historically seen more significant price swings than any other asset. The Organization of the Petroleum Exporting Countries, or OPEC, is the main driver of oil price changes. Second, there are the supply and demand rules. Prices fall when supply exceeds demand and vice versa when demand exceeds supply.

The current instability is the result of the Russian conflict in Ukraine, which has caused the price of crude oil to rise $100 a ton. Furthermore, crude oil prices have risen rapidly in recent weeks as the US and its Western allies have imposed tough sanctions on Russia. As a result, citizens’ lives are affected by the direct effect of fuel prices on rising inflation. Even the cost of other essential products has risen dramatically, leaving people devastated.

Taking full advantage of emerging panic

Rising fuel costs are putting economies under great pressure. Many worry about how this will affect the cost of other essentials, rather than focusing on how to take advantage of the situation. Some solutions can help in these situations, and specific DeFi projects, such as: Duet protocol, they offer a unique approach called synthetic asset guarantee. Users must provide liquidity to the protocol, which will be used to generate synthetic assets.

For example, a user can provide liquidity and choose to use dWTI, a synthetic asset whose price is pegged to WTI crude oil. And this asset allows users to earn rewards and other utilities within the Duet ecosystem. In addition, the platform allows users to generate synthetic assets such as oil futures, stocks, commodities, ETFs, indices, and real estate by providing capital to the reserve.

These assets, represented as dAssets, can be traded in swaps (DEX), staked to earn rewards, or held in portfolios to gain exposure. And the benefits of holding them over their physical equivalents are that they offer greater liquidity, fast transactions, easy accessibility, transparency, and low transaction costs.

Hitting Synthetic Assets on the 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 estate, synthetic inverse assets, synthetic leveraged assets, etc.). Currently, dUSD, dWTI, and dXAU are the only dAssets supported, with more to follow soon.

The process of minting these assets involves providing collateral by users. Duet accepts over a dozen high quality assets such as wBTC, ETH, USDT, DAI, LTC, etc. as collateral. Interestingly, Duet Protocol accepts assets that are unique in the DeFi world as collateral. It includes LP tokens in major swap protocols and certificates of deposit tokens in the credible lending protocols to improve the efficiency of users’ funds and protocol composition.

While the minting of synthetic assets is only part of the protocol, the platform will also allow the listing of creative synthetic assets, such as synthetic stablecoins that track inflation levels and NFTs. Anyone can view these assets without permission with the help of Oracle providers such as Chainlink, Band or Uniswap. This makes the Duet protocol the infrastructure for collateral treasury, meeting liquidation requirements while helping with regulatory compliance.

In addition, Duet will create a unique market making mechanism using synthetic assets with high liquidity and high trading volume. This eliminates the need to incentivize liquidity providers with tokens and allows arbitrage between TradFi and DeFi to maintain the protocol’s liquidity. And as a result, all “buy orders” on-chain are handled instantly.

Volatility is all that matters

The best investments are made in volatile times. Economic conditions continue to fluctuate for various reasons and one should take advantage of these opportunities. The current state of rising fuel prices could be an ideal time to invest in some assets. And, synthetic assets of Duet protocol, may be worth considering, given the reward mechanism. The current war scenario and interest rate hikes may last a long time, but it is up to people to look for and seize opportunities.

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