Investment Funds in DeFi (Indexes)
Did you know that you can delegate your assets to someone to take care of your investment decisions? Learn all about Indexes, a service where you can pay a fee for someone with more expertise to invest for you.
Investing can be a confusing and time-consuming process, especially if you're new to the world of stocks, bonds, real estate, or even crypto/DeFi. Many people want to start investing, but they don't have the time or know-how to analyze the market. This often leads to unwise investments, or worse, missing out on promising opportunities.
To solve this problem, there are investment funds, where you give your money to a financial professional who invests it for you. If the strategy works and you're happy with the returns, you can keep your money in the fund or even invest more to grow your capital.
Indexes and ETFs
Exchange-traded funds (ETFs) are pretty popular in traditional finance. They track the performance of an index (S&P 500, Nasdaq-100, etc), commodities, or specific sectors. You can buy and sell them on stock exchanges like NYSE and Nasdaq.
Think of ETFs and Investment Funds as a shopping basket, but instead of groceries, they hold different assets. The performance of the ETF depends on how each asset in the basket performs and how much of each asset is in the basket.
→ When you buy an ETF or a share in an Investment Fund, you're essentially paying professionals to handle the complex stuff. Your job is to sit back, pay some fees, and watch the results.
Indexes in Decentralized Finance
Decentralized Index Funds are very similar to ETFs. You buy a share that follows the performance of the assets in the index fund.
Investing in a fund within the Decentralized Finance (DeFi) space is a lot simpler than through traditional finance routes.
DeFi vs Traditional Finance
Creating an ETF or an Investment fund in traditional finance is not only expensive but also comes with a lot of regulatory red tape. Additionally, investors have to provide a bunch of personal information and wait for several days for approval.
However, DeFi Index Funds are fully transparent because all the information is available on the blockchain. Investors can watch every move the fund manager makes, judge if he is following the predetermined strategy, and decide whether they want to stay in the fund or leave, as per the rules of the protocol.
Index Funds Protocols in DeFi
Kassandra is a decentralized protocol that lets you create your own investment funds. It takes advantage of blockchain technology to offer transparency, safety, privacy, and fast, easy-to-use features.
The User Experience for managers is very qualified, as many different features are available to make good investment decisions. Also, the protocol’s smart contracts rebalance the manager’s index automatically by using Smart Indexed Pools (SIP), which eliminates the work of manually rebalancing the assets and the risk of doing it wrong.
An interesting feature of KassandraDAO is its partnerships with quantitative investment funds and external data providers. One of these partners is Heimdall! Heimdall provides the $aHype index on KassandraDAO. This investment fund includes the most active cryptocurrencies on the Avalanche blockchain over the past 30 days and adjusts them based on their Heimdall Social Score. This means you can invest in a strategy based on social activity!
Users cannot only buy these tokens and invest in social-active strategies but can also stake them in the protocol and earn a yield on it, which increases their positions and may translate into great gains in the long term.
Today, the protocol functions on the Avalanche blockchain, but the Kassandra Foundation is working to expand into a multi-chain ecosystem.
The token $KACY is available to buy, and its holders have governance power, which very interestingly lets them define a list of assets that the investment funds can trade. An example of this feature was when token holders decided to add $GMX to the $aHype portfolio.
- Index Coop
Index Coop is a leading protocol in the sector. It lets users invest in different complex strategies available in the protocol, similar to traditional ETFs, but without the need to navigate through extensive bureaucratic processes for investment.
One example of an investment strategy on Index Coop is the DeFi Pulse index, which tracks the performance of leading DeFi protocols. This allows investors to gain exposure to all of them in one place.
The token $INDEX is available to buy and gives its holders governance power to vote on the DAO proposals.
Decentralized Finance is shaking things up in the financial sector. Indexes, investment funds, and ETFs have existed for many years, but blockchain technology is bringing in a whole new set of possibilities, as shown by KassandraDAO and Index Coop.
If you want to diversify your portfolio and invest based on social activity, KassandraDAO's $aHype could be the right product for you! But remember, investing always comes with risks, so be careful and don't invest more than you can afford to lose!
Heimdall lets you track the growth and status of communities, projects, and influencers! You might discover a hidden gem that could totally change the game in the indexes sector! Feel free to use our tools to improve your investment analysis, and don't forget to follow us on Twitter to keep up with the latest news!
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