How DeFi Users Can Diversify through Automated Investment Management Protocols

How DeFi Users Can Diversify through Automated Investment Management Protocols
фото показано с : zycrypto.com

2022-3-9 21:16

Decentralized Finance (DeFi) has been the talk of the crypto community for the past two years, most die-hards believe this nascent ecosystem is a futuristic iteration of the financial markets. At the core, DeFi is built on smart contract infrastructure which means that users do not have to go through a financial intermediary to access services such as credit or investment opportunities. Instead, smart contracts act as the middlemen based on pre-coded conditions.

While DeFi is still a new concept outside the crypto community, it has grown past its experimental stage to feature advanced and interactive protocols. Today, this market touts over $192 billion in total value locked (TVL, not to mention the staggering amount of funds that has been flowing in from traditional and crypto VCs. So, how does the normal retail investor get a piece of this pie?

For starters, one has to understand how non-custodial wallets such as MetaMask work. Unlike trading on centralized exchanges, DeFi-oriented protocols are designed as permissionless ecosystems, allowing anyone with a non-custodial wallet to interact with the featured products. However, making money is not as simple as connecting one’s wallet; prospective investors have to learn and conduct proper due diligence before allocating funds into the DeFi market.

Automated DeFi Asset Management

With so much at risk, DeFi innovators have been under the hood building structured products to serve the growing demand by retail and institutional investors. This quest for a more lucrative investment approach has given rise to DeFi asset management platforms such as HyperDex. Unlike its predecessors which are mainly focused on sophisticated lending and borrowing products, HyperDex is built to mitigate DeFi risks by introducing investment baskets.

The HyperDex decentralized finance investment platform mimics the traditional asset management approach, featuring cube investments that allow investors to allocate funds depending on their risk appetite and ability. This DeFi management ecosystem offers various investment categories, including fixed trading, algo trading, race trading, and modular cube investments.

Prospective DeFi investors looking for a stable source of income can opt for the HyperDex fixed income cube. This modular is particularly lucrative for traditional-style investors whose goal is to preserve their capital while earning a passive income. Meanwhile, the algo trading cube is a perfect fit for advanced crypto traders, given that funds are managed through a robust and proprietary algorithm. 

DeFi investors can also leverage the race trading investment cube to speculate on price movements (similar to a futures contract). Last but not least, the HyperDex modular cube allows users to create their own trading strategies, attracting other stakeholders who might be interested in the featured plays. This investment ecosystem is accessible to anyone with a metamask wallet, provided you switch the network to Binance Smart Chain (BSC) testnet.

Decentralized Markets are the Future

As mentioned earlier, DeFi is a relatively new niche with the potential of changing the financial markets landscape. A recent report by PWC hails this burgeoning ecosystem as a unique blockchain-driven environment that will likely define the future of global markets, 

“One of the biggest draws to the whole idea of using blockchain technology to reinvent the finance space lies in how the market can become permissionless and open to anyone. A further attraction is the concept of composability, which means anyone can mix and match any existing DeFi offering to build a new one.” reads the report. 

Given this value proposition, it is only prudent for traditional and crypto market experts to join forces in building the next era of finance. This can be achieved by introducing market fit products such as investment management protocols, giving users an easier time in choosing their preferred positions.

Disclaimer: The ‘Crypto Cable’ section features insights by crypto industry players and is not part of ZyCrypto’s editorial content. ZyCrypto does not endorse any company or project on this page. Readers should conduct their own independent research before taking any actions related to the company, product, or project mentioned in this piece.

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