🏦 The Future of Finance is here

The frictionless, trustless, and permissionless nature of DeFi is reshaping finance forever. The legacy financial systems haven’t systematically changed since the industrial revolution, and we see DeFi as the first serious transformation of the legacy tech stack.

As with any emerging technology, there are a lot of opportunities and experimentation in the space, and this time they are open to everyone by design.

😱 But DeFi is hard (and risky!)

But DeFi is hard! Users are intimidated by countless options, confused by the complexity of protocols and struggling to navigate solutions built for crypto-natives. In the pursuit of the highest yield both people and institutions are taking enormous amounts of uncalculated risk.

Even professional investors fall victims to concentration risk, chasing options with the highest yield and getting burnt when the price of the underlying asset tanks to zero. And, as we know, a 100% yield on zero is still zero.

What can ordinary users do if even professional investors are getting burnt?

🙌 Diversify, diversify & diversify

The answer is already found in traditional finance: diversification. Modern Portfolio Theory emerged in the XXth century stating that the risk in a portfolio of diverse individual assets will be less than the inherent risk in holding any one of the individual asset.

ETFs (Exchange Traded Funds) with diverse holdings have become so popular that they have grown ~140x in volume since the Global Financial Crisis of 2008. In fact, currently, more than 9% of the entire stock market is held in ETFs. The benefits are clear: increased diversification, lower costs, liquidity, transparency of holdings, and tax benefits.

Crypto is poised for massive growth over the next decade as use cases grow, companies mature and people become increasingly comfortable with the technology. More and more people want a simple way to get exposure to crypto similar to ETFs in traditional markets. However, there’s currently no such options in DeFi despite growing interest, the closest we have are platforms offering simple portfolios that either don’t provide you a diversified exposure across the entire market or are not dynamically rebalanced.

⛓ A case for dynamic cross-chain diversification