Institutionalizing DeFi: Opportunities, Risks, and the Future of Finance - Learn DeFi - Treehouse

Institutional Investment in DeFi

$LSDETH will be the simplest way for institutions to get insured full exposure to ETH with real yield. It will also be prime collateral for leveraging into other positions. VCs and Institutional investors minting/redeeming via the PowerPool UI will pay no mint/redemption fees.

Some crypto VCs have already raised far more money than can be invested in seed rounds, and are looking for safe, yield bearing holdings that will look like more than just HODLing ETH. Non-crypto VCs are all allocating to insured, broadly diversified exposure to EVM POS chains in general, and Ethereum in particular.

The most important thing for institutional investors is that the investment be seen to be out-performing its benchmark, as this drives asset managers’ performance fees. Post-Shanghai, $LSDs should track very closely to the unstaked ETH price plus the intrinsic staking yield. Diversified baskets like $LSDETH add risk-optimised extrinsic yield on underlying LSDs and opportunties for basket farming on top…and thus will always beat the HODL ETH unstaked benchmark (given insurance) easily.

(Note: there is currently no benchmark for LSD investments…this is a big opportunity)

Add to this the composability options inherent in PowerPool’s blending capabilities. VCs and institutions are looking for safe, yield-bearing exposure to ETH that is also composable to higher-level blended baskets or ‘funds of funds’ holding analogous diversified baskets of L2 LSDs, and other L1 LSDs from other EVM-compatible POS chains. PowerPool blending can also be used to personalise risk profiles via funds-of-funds with less exposure to ETH volatility, like (50% $LSDETH & 50% $LUCY) and even a delta-neutral fully-hedged basket (50% $LSDETH & 50% inverse ETH).

The inevitable question from DAOs and Tradfi institutional investors contemplating allocating to $LSDETH will always be "Reporting? How can we see a dashboard to monitor what PowerPool is doing with $LSDETH? Are they beating the 'benchmark'?. How much is decentralisation bias costing in performance terms?” $LSDETH will have the type of transparent on-chain reporting and dashboards they need.

DAOs, Institutions and power DeFi investors will all be interested in the real-time analytics dashboard tracking the actions and performance of the $LSDETH basket based on intrinsic yield conditions on the Ethereum chain, extrinsic yield conditions/markets and associated Methodologist operational performance data feeds informing the parameter setting and optimisation algorithms. Gross yield on a the ‘optimal’ diversified basket will become a widely-used reference benchmark forthe time series of ‘risk-free’ ‘passive’ returns on Ethereum.

When will Asset Managers launch DeFi Funds?

Family Office Investor Education Seminar Deck

Half-day educational/marketing seminars targeting European and Gulf-based Family Offices:

PowerPool Family Office Tutorial

Example Institutional Investor Pitch Deck

Greyscale has a very professional deck for their listed, tradeable single asset investment trusts. Too bad it was a thorougjhly stupid idea and fee money grab. They even pushed ETC…

Greyscale Investor Pitch Deck.pdf

VC Listing